School FACT Act Brings Accountability to Michigan Schools

Legislative package holds charters, districts to same accountability standards
Thursday, November 30, 2017

LANSING — Legislation offered by a group of House and Senate Democrats would provide parents with the information they need to make informed decisions about their children’s education by shedding light on the authorizing organizations that oversee charter schools  and the education management organizations (EMOs) that run them. The School Freedom, Accountability, Choice and Transparency Act, or School FACT Act — House Bills 5286-5294 and companion Senate Bills 674-682 — would empower parents to make fully informed choices about education options and make the best decisions about where to send their kids to school.

“When we send our kids off to school in the morning, we want to know that they’re getting the best education possible — no matter which school they go to,” House Democratic Floor Leader Rep. Christine Greig (D-Farmington Hills) said. “While we have rules in place to hold traditional and charter schools accountable, we have no systems in place to demand accountability from the for-profit educational management organizations that run charter schools, or the authorizing organizations that oversee them. All kids deserve schools that are held to account, and that is what our legislation will do.”

Bills in the School FACT Act would address that problem and others by:

Requiring Disclosure

The School FACT Act would require EMOs to produce annual audited financial statements; authorizers to account for fees collected to oversee charter schools; and charter schools to publish their contracts with an EMO and that EMO’s financial statements on its website, and to account for its student recruiting costs.

Providing Accountability

Bills in the package would clarify the requirement that the state superintendent must suspend authorizers that fail to provide adequate oversight, and provides appeals and rehabilitation processes; and creates an authorizer’s duty to report a financially failing EMO to other charter schools under its oversight contracted with the same EMO.

Instituting Critical Reforms

The School FACT Act would prevent charter schools performing in the bottom 5 percent of schools from shopping for new authorizers or expanding to new grades or locations; require authorizers to attend all school board meetings of the charter schools it oversees and report on its oversight efforts; prevent EMOs from making “sweetheart” real estate deals using taxpayer dollars; and prevents conflicts of interest between EMOs and groups or individuals who establish charter schools.

The School FACT Act would also institute reforms that would give taxpayers additional peace of mind at a time that the state is contemplating giving for-profit charter schools a greater share of tax dollars. The state Senate recently passed Senate Bill 574, which would allow charter and cyber schools to raise money through special enhancement millages and allow those funds to flow through to EMOs and their bottom lines.

 Education management organizations are entrusted with great sums of taxpayer money, but we have few mechanisms in place that make sure those dollars are going where they should — to educate our kids,” said state Rep. Patrick Green (D-Warren). “My bill would end the practice of EMOs using your taxpayer dollars to conduct sweetheart deals with affiliated companies, and instead would require all transactions to be done using current competitive market values. When we give these groups money from the School Aid Fund, those dollars should be spent to help our kids learn — not to enrich corporate CEOs.”

Senate Democrats praised the School FACT Act, saying the bills would give parents the tools they need to make sound education decisions for their children.

“Parents today have a larger number of educational options than ever, and comparing options can be overwhelming,” state Sen. Hoon-Yung Hopgood (D-Taylor) said. “Parents need good information to make informed decisions. Traditional and charter schools are already held to disclosure standards, but the educational management organizations that run charter schools are not. With these reforms in place, parents will be empowered to make informed decisions for their families, which is what every mom and dad wants to do.”