Charter group lays off 1/6th of staff

The Los Angeles charter school organization ICEF Public Schools laid off 100 staff members – about a sixth of its work force – last week as part of a reorganization to keep its doors open.

The financial troubles facing ICEF, a network of 15 charter schools serving 4,500 primarily low-income African-American children in South Los Angeles, offer a cautionary tale of a non-profit organization that tried to expand too fast – 11 schools in three years alone – and then failed to make tough choices when state budget cuts hit hard.

Last month, the trustees of ICEF (Inner City Education Foundation) came within days of declaring bankruptcy and closing schools immediately, leaving students to transfer to Los Angeles Unified schools and other charter schools. Instead it called in the cavalry: Caprice Young, the former LAUSD board president and former president of the California Charter Schools Association, and philanthropists Eli Broad and former Los Angeles mayor Richard Riordan. Broad, Riordan and others gave an emergency gift of $2.5 million for ICEF to make payroll; Young agreed to serve as the temporary CEO, replacing ICEF’s founder, Mike Piscal. (Young’s job is supposed to be part-time, but when I caught up to her on Friday, she had been up all night, preparing a grant application to the Broad Foundation.)

ICEF serves about 7 percent of African-American students in Los Angeles Unified (two of 15 schools are largely Latino), and is recognized as one of the more successful charter networks, with a 95 percent high school graduation rate.  Every graduate in the past five years was accepted to college (91 percent of students remained in college after three years, more than twice the national average for African American students). The proficiency rate of 71 percent for students in its five elementary schools equals that of white students and is 28 percentage points higher than African-American students in LAUSD.

Young said there was no evidence of malfeasance but substantial bad judgment and a lack of transparency with ICEF’s finances. ICEF relied almost entirely on state tuitions. Like may charters in LAUSD, ICEF rented outside facilities, an added expense, especially for small schools (charters have been feuding with LAUSD over the use of district buildings, to which charters are  entitled under Proposition 39). Rather than hurt academic programs, Piscal borrowed when the state cut payments to schools substantially during the past two years.

Then, when the state further deferred payments to schools this fall, for lack of a state budget, ICEF was trapped.  Unlike school districts, which have been able to borrow through lower interest Tax Revenue Anticipation Notes or TRANs,  often through county offices of education, most charter schools had to turn to a more expensive private market.

ICEF’s board of trustees sensed there were financial problems and hired an accounting firm last winter, but was given only an oral report and not fully aware of the severity of the problems, Young said. The telltale sign was that ICEF ended up borrowing against state revenues beyond the current year – “a terrible idea,” she said.

The mid-year layoffs were painful but necessary, Young said. They included half of ICEF’s central office staff, many teaching assistants and teachers. The arts and athletics programs, which parents pleaded to save, were largely spared, although parents at the performing arts high school will have to raise $300,000.

Principals collaborated to come up with ideas. Some schools will share instructors of elective courses, and there will be come consolidation of space. Adopting the staff model of Rocketship Education, which I have written about, teaching assistants will lead lab periods and teach physical education and arts, reducing credentialed teaching positions.

ICEF is not out of the woods yet. Young said it will seek to raise $9 million in grants from Broad and other foundations to retire its debt. Beyond that, it will put aside $6 million of the $38 million in expected state revenue next year to build a reserve and to set aside money for future expansion of the network.

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About John Fensterwald - Educated Guess

John Fensterwald, a journalist at the Silicon Valley Education Foundation, edits and co-writes "Thoughts on Public Education in California" (www.TOPed.org), one of the leading sources of California education policy reporting and opinion, which he founded in 2009. For 11 years before that, John wrote editorials for the Mercury News in San Jose, with a focus on education. He worked as a reporter, news editor and opinion editor for three newspapers in New Hampshire for two decades before receiving a Knight Fellowship at Stanford University in 1997 and heading West shortly thereafter. His wife is an elementary school teacher and his daughter attends the University California at Davis.

11 thoughts on “Charter group lays off 1/6th of staff

  1. Caroline Grannan

    I sometimes poke around in the data on much-hailed charter school chains, and ICEF’s have never shown any weak points. (By contrast, Green Dot schools’ test scores are generally dismal, and most KIPP schools have more than half their students leave between enrollment and graduation, without replacing them. ICEF schools haven’t followed those patterns, at least based on the publicly available data.)
    So it’s interesting — and troubling to those who hoped that these schools were a model that public schools could follow — to learn that ICEF schools achieved their successes while (or *by*) living far beyond their means. This should cause those who claim that public schools don’t need more money to rethink.
     

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  2. R Wolfe

    What most people fail to realize in this charter schools are better than regular public education is that  public school districts are required by law to provide oversight of the charter school, both fiscally and instructionally. This requires public school district staff to use time that could be used for their district in reviewing reports and records and visiting the charter school. Fiscal problems (mainly misuse or alleged misuse of public funds) continually surfaces at charter schools. The question no one raises, if charter schools are so great and so much better than regular public schools (not the case by the way), why do regular public schols have to monitor charter schools and  provide the chater’s special education services? If the charter model is so great, then why do regular public schools still have to fllow the California Education Code (and numerous other state regulations, and why are pulbic school Board members and officials subject to conflict of interest rules?  i would like to thank Mr Fensterwald for not victimizing the authorizing agency for ICEF poor management and fiscal decision making.

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  3. Robert

    Thanks, John for a very fair treatment of ICEF. I worked there for a long time before I left about 6 months ago. ICEF offers parents something different than traditional public and charter schools – a holistic approach to education with the arts, music, and sports program and a curriculum that is not drill and kill test skills based. Amazing how all of those enrichment activities, taken for granted in higher SES school systems, actually increases attendance and raises test scores. Of course, things could have been done differently financially – hopefully, people will use this as a cautionary tale (ICEF is not the only one to borrow against state revenues) and the focus on ICEF will also look to what was working as opposed to solely what is not.

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  4. Cindy

    In answer to RWolfe… LEA Districts are paid 1% of a charters revenue to provide oversight (not monitoring) and that oversight is spelled out in California Education Code. Part of the oversight is specifically to be reviewing the charters fiscal health – so the district does have some shared responsibility in this situation. As for Special Education –  service is not universally provided by LEA Districts but is addressed in an MOU between the charter and the LEA – the LEA has a say in this.

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  5. Greg Lippman

    As someone who has been working in charters for a while, and has read with much interest Ms. Grannan’s on-going critique of charters, I’d just like to add one additional piece of the puzzle: facilities. I agree with Ms. Grannan that ICEF was a success, and its recent difficulties are troubling. That having been said, one of the most consistent grievances voiced by charter critics is that charter schools have access to private funding (often accompanied by dark allusions to “privatization” and “hedge fund managers.”)
    As someone who is working on developing a permanent facility for the school I am currently working for, I can say with no hesitation that I would trade all the private donations in the world for the same access to bond-funded, stable facilities that school districts enjoy .  I would guess that a significant element of ICEF’s financial struggles stem from the challenges of being forced to develop school campus options from scratch in the neighborhoods of the kids they look to serve, which tend to be both high-density (meaning very little raw land for development) and short on available buildings that can be converted into schools.
    All of us–district and charters alike–need to be better stewards of both the public trust and public funds. But I think it’s worth noting that an organization like ICEF, with its outstanding results and long waitlists, was still forced to spend significant amounts of their per-pupil funding on simply getting a roof over their students’ heads.  Ms. Grannan may be correct that the key lesson to be learned from ICEF’s struggles is that schools in general need more funding; it seems more likely from my vantage point that the answer for growing charter networks is not more cash, but to simply have the same access to affordable, stable facilities that district schools enjoy.

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  6. Caroline Grannan

    The charter chains themselves eagerly promote their success in winning private funding — check out the website of any Aspire/KIPP/Envision/Green Dot-type operation. It’s complicated to explain to the uninitiated (if there IS anyone uninitiated reading this, which seems unlikely) why that would be presented as a “grievance” by charter critics when charter operators announce it proudly. There are several reasons, of course:
    – Money being donated to charter schools is money not being donated to public schools — and the same goes with other support of whatever kind — and as charter schools have essentially positioned themselves as being in hostile competition with public schools, one can see why that’s problematic. (I can see charter supporters getting ready to retort that public schools started it. I’ll just pre-emptively discredit that with one example: When Edison Schools, the once-hailed, now-fizzled for-profit charter operator, won contracts with school districts during its heyday, it routinely started promoting itself as superior to its client districts, sending out whatever permutations of achievement data it could to attempt to support those claims. These were client districts that had just willingly agreed to do business with Edison, so the districts can hardly be viewed as having positioned themselves as combatants. Edison really dominated the charter world for a while, so its strategies had high impact.)
    – Charter schools themselves often claim to operate on less money than public schools, part of that hostile competitive strategy.
    – In general, the forces that most support charter schools are aligned with the forces that are hostile to providing adequate funding for public education, though that’s not always consistent.
    It’s not really subject to debate that the charter school setup involves providing public funds to private operators, so that’s why charter critics refer to it as privatization.
    Charter schools have attracted enormous support from the nation’s wealthiest people — billionaire philanthropists such as Bill Gates, Eli Broad, the Walton Family Foundation and many more. The New York Times ran a story a couple of months ago on how charters were now the popular philanthropic beneficiary in the hedge fund world, so that’s what those references are about — they may be called “dark allusions” by those to whom they cause a little discomfort.
     
     
     

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  7. Greg Lippman

    Just to respond to a couple of elements of Ms. Grannan’s analysis:
    –If the point with the Edison example is to somehow underscore the notion that in the district-charter world, districts are more sinned against than sinning, I can only respond that my experience is drastically different. Edison, as a for-profit operator, was/is quite an outlier in the world of California charters, and I think it’s no accident that, given the flaws in their operation that are described here and elsewhere, that they were unable to grow and thrive as they quite noisily planned to do. The “now-fizzled” part is the key, and perhaps makes the strongest case possible for why many of us who struggled to make change happen in traditional schools are attracted to charters, where failure and success sometimes (not often enough, but often enough to be important) have actual consequences for the adults at the school. If Edison ever really did “dominate” the charter world (and that would be news to me), their dominance was pretty exceptionally fragile.
    –Ms. Grannan points to “charter critics” who, based on the fact that charters receive money from private sources (like every school district I’ve ever seen), refer to charters as “privatization.” I would expect that Ms. Grannan would refute that point, when she encounters it, by explaining that charter schools in California are public schools. As Ms. Grannan says, this is not subject to debate.
    –I also think I speak for quite a few folks helping to start and sustain charter schools that the primary focus of our “hostility” is the vast disparity between the educational attainments of different ethnic groups in California and elsewhere, and that it makes us feel “discomfort” when we hear the folks in charge of our educational system often refer to forces outside of their control as the reason for that disparity.
    –Charter schools do not “claim” to operate on less money. Please see the most recent Ball State study at http://www.bsu.edu/teachers/ocsr/funding/.  And a significant source of the disparities noted here is funding for facilities.

    And that was really the point I was trying to make: the lack of access to the facility financing model that works so well for district public schools would make a profound difference if it were available to all public schools. And I think that I speak for a lot of folks in charter schools when I say that we’d be very interested in working on developing a model where we could secure affordable facilities and give fundraising the short shrift it deserves.
    I would hope that Ms. Grannan and I could agree that charters should not be having to raise so much money from private sources, and it is my contention that if the facilities conundrum could be solved (and I don’t claim any easy answers), then perhaps both of us would see a public school world that is closer to our ideal.

     

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  8. Caroline Grannan

    It’s my observation that the charter school movement was the aggressor in shifting into attack mode against public schools. It seemed like they were an interesting and benign innovation at first, but I became aware of their combative attitude when I attended a San Francisco informational event about charter schools presented by CANEC, precursor of CCSA, in (I’m pretty sure) December 2001. At the time I was involved in the Edison Schools controversy and was a critic of *for-profit* charters, but had no issues with nonprofit charters.
     
    At the event, a series of speakers touted charters as superior to public schools. Jerry Brown spoke about his then-planned arts and military charter schools, and the attitude conveyed in his speech was that he was gonna show those stupid educators how it was done. (I’m still voting for him, though.) Mark Kushner –then of Leadership High, now of Flex Academy, the charter where the students work on laptops in a hotel meeting room — claimed in his speech that SFUSD’s charters were outperforming all other SFUSD schools, which was totally false (I could have shouted “you lie!” but I’m too polite). Reed Hastings was the voice of reason, implicitly urging the others to dial it back and cautioning that charters weren’t outperforming public schools — but he said that they should and would soon.
     
    The reason I say Edison dominated was that it was hailed by the press and policymakers, and claimed some 130 schools. I think it was by far the largest charter chain of its time.    I agree about the reasons it fizzled.
     
    I would say charters are privatized public schools. What I meant is not subject to debate is that private operators run charters.
     
    Are you saying that poverty is NOT the cause of the achievement gap? That’s kind of a radical point of view.
     
    My view on charters’ private fund-raising is complicated. What I see is many charters offering resources that public schools can’t possibly afford, which the charters are able to do due to the generous private philanthropy they receive.  Then the charters are praised as superior for being able to offer those resources. How many news stories have we seen praising KIPP’s longer school day and year, most of which fail to mention how unaffordable that is to public schools? That said, of course I believe that all schools should receive the funding to offer the resources their students need.
     
     
     
     
     

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  9. Liann Sumner

    The point made in the article that is CRUCIAL to get is this: “Rather than affect academic programs, Piscal borrowed…”  Of course if every public school could borrow from benefactors and foundations, all the academic programs,  and the art, music, physical education and other enrichment programs would continue untouched, and we would not be surprised to see success with these students too!
    Since this is not the case,  public schools rely on quixotic formulas that change year to year and continually underfund core academic and enrichment programs.
    The hard truth is, excellent schools cost SERIOUS MONEY, and we do not have the political will to provide that.

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  10. Pingback: 10 Concerns about Charter Schools « charter-watch washington

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