Flunking Out

Charter school scandals are teaching Texas a tough lesson -- one the state should have known four years and $77 million ago.

There is no guarantee that a revamped application process would ferret out these kinds of details, however. The state would have to rely on the applicant's word, because TEA would not conduct an independent background check. The agency simply doesn't have the resources.

During the past legislative session, Education Commissioner Mike Moses told lawmakers that he needed 24 additional full-time employees at TEA to oversee charter schools adequately. The Legislature gave him only six.

Charter school oversight already is taxing TEA's financial audit division, led by Canby. In addition to conducting the half-dozen investigations of charter schools, Canby's auditors visited 51 campuses during the 1998-'99 school year to take a cursory look at their books and offer basic accounting tips. Had they not made the visits, the number of charter schools in financial straits would be even higher.

Deborah Lott, principal of the Renaissance Charter School in Arlington, is still a believer in charter schools -- despite horrendous problems at Renaissance, and provided that the state provide better oversight.
Mark Graham
Deborah Lott, principal of the Renaissance Charter School in Arlington, is still a believer in charter schools -- despite horrendous problems at Renaissance, and provided that the state provide better oversight.

"We accomplished a tremendous amount of damage control giving free consulting advice," Canby says.

Canby's auditors hope to curb one problem by making sure charter schools are reducing their expenses accordingly if enrollment is lower than expected -- the same bug that bit Life's Beautiful. "It is rather shocking to see how a few of the charter schools -- I'm not generalizing here -- seemed oblivious to the reality of what a fewer number of students meant to their budget," Canby says.

Charter school officers should at least have an inkling of the financial challenges they face. TEA gives every new charter holder a thick three-ring binder that doubles as the state's official "charter school handbook." It covers a range of information pertaining to financial management. The books are handed out at a two-day orientation workshop that school officers are invited -- but not required -- to attend.

In Canby's professional opinion, a thick notebook and a two-day training session don't even come close to keeping a charter school financially solvent. Canby thinks state policymakers might want to think about requiring the schools to have someone on board with advanced degrees in school finance.

Outlaw, who is trying to piece together the financial puzzle left by Life's Beautiful, says the state might want to require charter holders to post a bond as a condition of being awarded a school.

"If I was starting a business, I would have to show financial responsibility," he says. "A bank is not going to give me any money unless I can show I can do the job."

Placing more restrictions on people who want to start charter schools is a tricky deal for state policymakers, since the concept behind charter schools is to limit regulation.

"The legislative intent was to make it easy to start a charter school," says state Rep. Joe Nixon of Houston. He is on the board of Houston Advantage, a charter school scheduled to open this fall. "Charter schools are not intended to be mini-replicas of public schools. They also are not designed to set up a new structure of administration and overhead and forms that need to be filled out. What we don't want to see is an application process that is so arduous and full of red tape that it would take years for any charter to be approved."

No process is perfect. Even though the first 20 charter applicants were interviewed by the Board of Education, a bad one slipped through. Cypress Lodge in East Texas never opened, although it gladly accepted checks from the state -- about $240,000 worth. The Texas attorney general has been trying to recover that money for more than two years. The state learned its lesson and now pays a charter school only after it opens.


The motto at YES College Preparatory School, an exemplary charter school in the downtown area of Houston, is "Whatever It Takes." It's a message to the school's nearly 400 students. It takes hard work, strict discipline, and respect for others to get the full benefit of what school has to offer. It takes braving the rigors of what its founder calls "the hardest school in Houston" to survive the college experience that lies ahead.

"Whatever It Takes" also is a message to those who operate the charter school.

"I don't want to come across as cocky, but it takes some brains to pull this off," says Christopher Barbic, the school's founder and director. "It takes more than good intentions and a good heart."

For one thing, it takes money.

Unlike lesser charter schools, YES College Prep raises several hundred thousand dollars a year from foundations, corporations, and other sources to help its well-rounded educational program. The money helps pay for sending students on extensive field trips. Last year, 10th-graders visited Boston and New York and toured Harvard, Massachusetts Institute of Technology, Columbia, and New York University. It also pays for cultural enrichment classes on Saturday, which students are required to attend every other week. And it pays for extra supplies and food to keep students well-stocked and well-nourished.

YES employs a teacher who spends half of the workday promoting the school and soliciting contributions. It pays off. For example, students have access to 100 used laptop computers, donated by the Arthur Andersen consulting firm.

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