FOCUS DC News Wire 11/7/13

 

 

Options Public Charter School is facing a budget shortfall of $1.6 million and critical gaps in leadership following allegations that the school’s former managers diverted millions of dollars to companies they owned, according to a newly unsealed court document.

 

Options is also in the middle of a “public perception crisis that is having material, adverse effects on the school’s operations,” according to a report filed Oct. 21 by the court-appointed receiver, Josh Kern, who is overseeing Options while authorities investigate the alleged financial diversions.

 

Kern’s report shows a school in distress: Students have withdrawn, employees have been laid off, and administrators are struggling to deal not only with day-to-day logistics but also with the burden of “multiple ongoing investigations.”

 

“Options PCS is in a difficult financial and operational situation that requires significant, immediate attention,” Kern wrote.

 

D.C. Superior Court Judge Craig Iscoe unsealed Kern’s report Tuesday, but he required significant portions of the report to be redacted, including most of its 17 appendices.

 

The Northeast Washington school, the city’s oldest charter school, serves about 400 at-risk students, in grades six through 12, most of whom have disabilities, are homeless or are in foster care.

 

A civil complaint

 

The D.C. attorney general’s office filed a civil complaint Oct. 1 alleging that three former managers at Options took “exorbitant” bonuses and concocted a self-dealing scheme that funneled at least $3 million from the school to two for-profit companies. The suit also alleges that the scheme was carried out with the help of the Options board chairwoman and a senior official of the D.C. Public Charter School Board.

 

No one has been criminally charged in the case. But investigators have been conducting interviews, and a grand jury was expected to convene last month. Each of the defendants has denied wrongdoing.

 

Meanwhile, the former managers — who were still running Options from positions at their for-profit management companies — agreed to cut all financial ties to the school, handing over operational responsibility to Kern. Options then lost most of its key leaders, school officials whose responsibilities ranged from finances to extracurricular activities.

 

Pamela Marple, an attorney for the two management companies, said the allegations and removal of the management companies from the school’s daily operations led to the problems that Kern has reported.

 

“The report underscores the dangers of shooting first and asking questions later,” Marple said. “The truth is that Options School did not have budget deficiencies or service problems until last month. In fact, the school had millions in cash assets and had achieved reauthorization to operate for 15 more years, but then the school’s management was removed amidst a whirlwind of unsupported and false allegations.”

 

Kern wrote in his report that simple things at Options, such as ordering paper for teachers, became complicated because contracts with important vendors were held by the management companies, not by the school itself.

 

“In the first two weeks, my team and I were inundated with general management and crisis management issues,” Kern wrote in the report.

 

The school’s bleak budget outlook is one of its most pressing problems, and Kern said he had to come up with a “rightsizing plan” to lay off enough employees — the exact number was redacted — to save $800,000.

 

Social studies teacher Modestine Montgomery said she was notified Friday that she had been laid off with two weeks’ severance pay. She said she did not know what criteria were used to determine who would be fired, and she was frustrated, believing that she was paying the price for someone else’s alleged wrongdoing.

 

“So much money was taken from the kids — and from me,” Montgomery said. “I feel like so much money was taken from me.”

 

Montgomery said she is figuring out how to finish her master’s degree in special education — which requires another semester of classroom hours — and how to support herself and her 2-year-old daughter while she maps out her future. It’s a future that is unlikely to include teaching, she said.

 

“I’m underpaid. I’m undervalued,” she said. “I definitely can’t stay on this path.”

 

Enrollment shortfall

 

Part of the shortfall at Options is attributable to lower-than-expected enrollment. The budget for the 2013-14 school year was based on an estimated enrollment of 412 students, but Options had 388 students as of early October. The decrease of 24 students — many of whom would have disabilities and would bring in as much as $28,884 each in additional public dollars — means an estimated loss of about $720,000 to the school.

 

The school also has lost a $600,000 city grant, withdrawn in the wake of the allegations of self-dealing, and Options has paid the former managers’ companies nearly $1 million for services that must be performed by someone else.

 

Options’ current budget projected $1.5 million in Medicaid reimbursements for special education services delivered at the school. But those payments “are unlikely to materialize due to the ongoing [redacted] of alleged impropriety in Medicaid billing,” Kern wrote.

 

The civil complaint does not accuse anyone of Medicaid-billing improprieties, but it does allege a dramatic and disproportionate increase in students identified as having the highest level of disabilities, which presumably could boost Medicaid reimbursements. Each charter school is allowed to classify students based on a range of special education needs, and those with more needs generally bring in more funding for the school.

 

The D.C. Public Charter School Board has said Options will stay open through the end of the year, but its long-term future is uncertain.

 

Valerie McGill, the parent of a junior, said she doesn’t know what she’ll do if Options closes in June. “That's my main concern,” McGill said. “Are they going to be open for my daughter to at least graduate?”

 

 

Frankly, it took a couple of days for my hand to recover from having to write so quickly during my recent interview with the co-founders of Charter Board Partners. Joining me for a fascinating conversation were the group’s president Carrie Irvin and the organization’s executive director Simmons Lettre. Ms. Irvin began speaking before I could grab my pen.

 

“A quality education for all children is the civil rights issue of our time,” the CBP President explained. “What we realized,” stated Ms. Irvin, “is that no one was focusing on the boards of charter schools—they were the soft underbelly that is so crucial to charters being successful academically.”

 

Before founding CBP, Ms. Lettre and Ms. Irvin each spent about 15 years working for organizations engaged in national education reform and policy, focusing on underserved elementary and secondary students. Both also did stints as classroom teachers. They met in the mid-1990s while holding positions at a national education reform nonprofit, and worked together again for another national organization more recently. One characteristic they had in common was a sense that professionally, something was missing. While the organizations for which they were employed were doing important work, they wanted to be engaged in careeers that had a more immediate and direct positive impact on children.

 

Ms. Irvin had become acquainted with Cedric Bobo of the Carlyle Group. Over dinner one evening with their spouses, the two discussed the idea of forming an organization that would recruit people to serve on charter school boards and train the boards in effective governance. Ms. Irvin became so excited about the concept that she called Ms. Lettre from her car to discuss it on the way home from the dinner.

 

By some particularly fortunate coincidence Ms. Lettre had been thinking about the same exact need. She had just joined the board of directors of Capital City Public Charter School and she remembered sessions in which they were trying to make an extremely difficult and crucial decision about the building that would become their permanent facility. “I really felt that I didn’t have the knowledge or was even asking the right questions necessary to be making this determination,” the CBP executive director recalled.

 

The two highly energetic women conducted roughly four months of due diligence before forming Charter Board Partners, meeting with a who’s who of education reformers and planning the design of their organization from the kitchen in each of their homes. Besides talking to the Carlyle Group they spoke to Jim Shelton, then at the Gates Foundation, NewSchools Venture Fund, the Walton Family Foundation, Teach for America, and of course, Katherine Bradley of CityBridge Foundation. All provided strong encouragement, and some followed with generous financial support.

 

The real turning point in the creation of CBP came after they approached Naomi Rubin DeVeaux, then at FOCUS, about their plans. “She asked us to present a workshop in three weeks,” Ms. Lettre explained. “We realized there really was no one giving charter school boards the support they should have on effective governance.” Convinced of the need, Ms. Lettre and Ms. Irvin successfully applied for 501(c)3 status and opened Charter Board Partners on September 7, 2010, which also happened to be the first day of the new school year for their children.

 

The enthusiasm that led to the creation of Charter Board Partners has clearly not dissipated by even one degree. This is probably why after working with seven charters as pilots during their first year of operation the group is now engaged with 21 schools, with a goal of signing up half of the 60 charters now located in the nation’s capital by June 2014. But that is just the beginning. Because of national interest in their services, CBP plans to expand to five additional cities across the United States over the next three years. Ms. Lettre stated that the exact locations have not yet been determined. Most impressive is that this organization has risen to this high level of achievement over a very short time period with an exceedingly small staff. The organization included only the two founders for the first 14 months, grew to a staff of four by the end of year two, and as of this week is at eight people strong, including the founders.

 

Stepping back for only a moment to listen to Ms. Lettre and Ms. Irvin made me understand why they have been so successful. They explained to me that they are actually in the human capital business. Ms. Irvin commented, “People are extremely busy. They have jobs and families. Once they make the highly philanthropic decision to join a charter board they need support so that they can make the best use of their time. They need specific information and tools so that the thousands of dollars worth of talent that is represented around the boardroom table becomes efficiently and effectively plugged in to the world of public education in ways that support improved school quality.”

 

So that board members do not need to develop these resources on their own, the staff of CBP has done the work for them. “We have spent years studying non-profit boards, looking at best practices, reviewing the research on highly effective organizations, and combing through an abundance of material to be able to set high standards for the jobs charter school boards perform,” detailed Ms. Lettre. The executive director continued, “We have developed the charter sector’s first high standards for effective governance guidelines so that boards know what they are supposed to do, and we are building a set of powerful tools to help boards reach these goals. We provide templates and allow our clients to modify them for their needs. A good example of this is that we have a tool focused on evaluating the school leader, which boards many times amend to better align with their needs. But they didn’t have to start from scratch, and ours incorporates best practice from across many charter school boards.”

 

An important role played by Charter Board Partners is to recruit and train individuals to be high performing board members. The CBP co-founders have recruited a strong network of individuals interested in joining a charter school board, who have relevant skills and experience that charter boards need. Over 200 people have completed their one-day board candidate training program. The CBP team matches board candidates from this pipeline to boards, based on the unique needs of each charter school. To date, 70 people are serving on charter school boards in DC through the CBP network, and that number is rising every month.

 

One area that intrigued me was our conversation about governance training for heads of schools. The CBP partners talked about how important it is that the school leader trusts his or her board. Ms. Irvin pointed out that the board can provide tremendous value to the head of school. “The members add expertise in areas about which the head of school may not have knowledge,” she revealed. “They can be a sounding board for school leaders, and become ambassadors for the school.” Ms. Lettre added that the board can additionally bring in money, ensure that resources are managed effectively to best support high academic achievement, and provide outreach for the school to a wider audience. They can also allow the school leader the opportunity to have a meaningful annual evaluation, Ms. Lettre instructed.

 

We could have gone on talking about his subject through the night. I thought I should conclude our discussion by asking if there is quantitative evidence that working with Charter Board Partners improved academic performance. “We are not ready to make a claim like that at this time,” responded Ms. Irvin. “However, on last year’s DC CAS, 63 percent of charter schools in DC that are not working with CBP improved their scores. Of schools that worked with us, 75 percent saw their student test results go up.” Based upon my time with Ms. Lettre and Ms. Irvin I’m totally convinced that their involvement has led to higher student academic achievement.