Charter schools are a hot real estate market — and that’s bad for students

Jeremy Mohler
Oct 18, 2018 · 3 min read

Where there’s smoke there’s fire — and there’s tons of smoke when it comes to the charter school industry pocketing public money meant for school buildings.

It seems like almost every week another charter school operator is exposed for taking taxpayer money that was supposed to be spent on renting, building, or buying classroom space.

One recent example: a charter school in California, Imagine Schools at Imperial Valley (ISIV), closed its doors in September after years of poor academic performance — but not before its owners made out with a fortune.

ISIV was spending a substantial portion of its annual revenue — all public money — on rent paid to a company connected to its owners. In a labyrinthine scheme, the school subleased a converted department store from a related for-profit corporation that leased from another corporation. As of February this year, ISIV had paid $7.9 million in rent even though the store was originally purchased for $3.1 million.

Such “related-party transactions” are so common that a professor at the University of Connecticut wrote a report last year comparing the charter industry to the energy-trading firm Enron, which collapsed in 2001 under the weight of massive fraud. “Without strict regulation, some bad actors have been able to take advantage of charter schools as an opportunity for private investment,” he wrote.

You might be thinking, aren’t charter schools nonprofit? Yes, most are. But in practice, running a charter school— or even just renting space to one — can be quite the prosperous venture.

Why else would real estate developers be lining up to invest in charter schools? Like Bobby Turner, who, along with former tennis star Andre Agassi, has financed the construction of 79 new charters serving over 41,000 students nationwide. And billionaire Bill Ackman, who has landed more than 10 percent in annual returns investing in the Turner-Agassi Charter School Facilities Fund.

Maybe investors really do think that they’re “creating societal good or solving an important problem,” as Ackman says, but here’s the real problem: how would we know otherwise?

In many states, information about how public dollars are being spent on charter real estate isn’t publicly available.

As In the Public Interest concluded in a 2016 report, California has spent billions on charter school facilities without any meaningful strategy, with money even continuing to go to operators who have engaged in corrupt or unethical behavior. We later found that due to a severe lack of oversight and transparency an untold amount of public funding is being lost each year.

Journalist Rachel Cohen recently thoroughly documented how in Washington, DC, which has one of the nation’s largest charter sectors, operators are not required to spend the public money they receive for facilities actually on facilities, nor must they publicly document the conditions of their buildings. The District’s charter schools, which receive around $800 million in taxpayer money every year, aren’t subject to the Freedom of Information Act (FOIA).

So, what does all this mean for those who really matter when it comes to public education, the students?

I’ll let former public school teacher Peter Greene sum it up, as he did in a recent Forbes opinion piece: “Every dollar spent on students is one dollar less to go into the bank account of the business; the interests of the students and the interests of the businesses involved in the school are in opposition to each other.”


Want a story like this about privatization’s impact on the criminal justice system, public education, and more once a week in your email inbox? Sign up here.

Jeremy Mohler is a writer and communications strategist for In the Public Interest, a nonprofit that studies public goods and services. He’d love to hear from you: jmohler@inthepublicinterest.org

Jeremy Mohler

Written by

Writer, meditation teacher, and host of “Meditation for the 99%.” jeremymohler.blog & inthepublicinterest.org. Get meditation tips: jeremymohler.blog/signup

In the Public Interest

In the Public Interest is a nonprofit that advocates for democratic control of public goods and services.

Jeremy Mohler

Written by

Writer, meditation teacher, and host of “Meditation for the 99%.” jeremymohler.blog & inthepublicinterest.org. Get meditation tips: jeremymohler.blog/signup

In the Public Interest

In the Public Interest is a nonprofit that advocates for democratic control of public goods and services.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store