Study: Don’t Make Mortgage Industry Mistakes with Charter Schools

By Michael Hill

The study warns policy makers to beware of treating the charter school industry like the mortgage industry in the mid-2000s when risky and lax lending led to a glut of home loans that borrowers really could not afford, causing them to lose their houses to foreclosure and crippling the economy.

“And the primary problem that we found was this emphasis by supporters of charter school expansion in calling for multiple authorizers,” said Preston Green III, professor of educational leadership and law at the University of Connecticut.

Authorizers other than the local school board, such as from the private sector or universities, says UConn professor Green. He led the study entitled, “Are We Heading Toward a Charter School ‘Bubble’?: Lessons from the Subprime Mortgage Crisis.”

Green and professors from Montclair State, Rutgers and Wisconsin fear the impact of too many authorizers who are not connected to local school districts in African-American and urban areas.

“If a charter school does not do well and is slated for closing, then it is the school district in which those children are living that have to assume the responsibility of providing an education for those children. And so because of this natural lack of risk, or assumption of the risk, these charters may be much more likely to engage in lax screening,” Green said.

“I think those charges are unfounded particularly in New Jersey where we have very strong charter authorization,” said Shavar Jeffries, former president of Newark Schools Advisory Board.

Jeffries says it’s about educating children and holding schools accountable.

“New Jersey has really led the way in that regard and in our state we see some of the best performing charter schools in the country and we’ve seen where we’ve seen some excesses. In some extraordinary cases, we’ve seen charter schools close in those contexts as well. We need that same accountability in traditional public schools,” he said.

Jeffries and Professor Green say generational failure leads to the kind of results of a survey of 600 black voters in New Jersey: 65 percent support vouchers for private schools, 77 percent support more choices in local school districts.

“Every other community already has choice, so I’m not surprised that large numbers of people of color want choice, too. White folk have choice, move to the middle class suburbs over decades and exercise options. The political elite in places like Newark exercise choice,” Jeffries said.

“The concept of choice is a very, very powerful concept for people who feel that they really haven’t had control of their educational well-being,” Green said.

But, Newark Mayor Ras Baraka opposes charter school expansion and how it takes money away from traditional public schools.

“I’m going to fight to make sure that traditional public schools are strong and remain open and they remain an option for all of our children in all of our neighborhoods. The only thing that’s going to save our community is community schools,” Baraka said on his blog.

But, the mayor has a tough fight ahead as the governor promises to make it easier to establish charter schools. The federal “Every Student Succeeds Act” will give states grants for charters and corporate America — such as the Walton Foundation and Netflix — pump nine- and 10-figure dollars in to charter school expansion.

The study’s authors say be careful.

“Choice without oversight may really cause some major problems in these communities,” Green said.

The study concludes that state and federal policy makers should pay attention to the lessons offered in the subprime mortgage crisis and they should put in place safeguards to avoid such disasters so that parents and school boards won’t be left scrambling to pick up the pieces.