Collapse of 60 Charter Schools Leaves Californians
Scrambling
By SAM DILLON
Published: September 17, 2004
http://www.nytimes.com/2004/09/17/education/17charter.html?th (must
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Ken Larson was pacing the floor of his office in a tiny elementary
school in Oro Grande, Calif. surrounded by the chaos of fax lines
beeping, three beleaguered secretaries peppering him with questions and
phone lines ringing for the umpteenth time.
It had been a month since one of the nation's largest charter school
operators collapsed, leaving 6,000 students with no school to attend
this fall. The businessman who used $100 million in state financing to
build an empire of 60 mostly storefront schools had simply abandoned his
headquarters as bankruptcy loomed, refusing to take phone calls. That
left Mr. Larson, a school superintendent whose district licensed dozens
of the schools, to clean up the mess.
"Hysterical parents are calling us, swearing and shouting," Mr. Larson
said in an interview in Oro Grande last week. "People are walking off
with assets all over the state. We're absolutely sinking."
The disintegration of the California Charter Academy, the largest chain
of publicly financed but privately run charter schools to slide into
insolvency, offers a sobering picture of what can follow. Thousands of
parents were forced into a last-minute search for alternate schools, and
some are still looking; many teachers remain jobless; and students'
academic records are at risk in abandoned school sites across
California.
Investigators are sifting through records seeking causes of the
disaster, which has raised new questions about how charter schools are
regulated.
"Until the Charter Academy went into its tailspin, few people predicted
that these crashes could be so bloody, but this has been a catastrophe
for many people," said Bruce Fuller, a professor of education at the
University of California, Berkeley. "The critics of market-oriented
reforms warned of risks with the philosophy of let-the-buyer-beware, but
in this case, buyers were just totally hung out to dry."
Jack O'Connell, the California superintendent of schools, said in an
interview that a majority of the state's 537 charter schools were making
a solid contribution to public education. But Mr. O'Connell has
concluded from the disaster that the state must apply "tough love" in
regulating them, "to keep this kind of near-bankruptcy and chaos from
happening again," he said.
"If there's mismanagement and malfeasance, we'll come in and put you out
of business," he said.
Back in 1999, the national movement to provide alternatives to parents
through charter schools, which face less burdensome regulation than
other public schools, was gaining steam. Many charter schools have since
flourished, and experts say that some of them offer an excellent
education. But in Southern California, there were signs of trouble soon
after C. Steven Cox, a former insurance executive whose only educational
credential was his brief service on a local school board, founded the
Charter Academy.
State auditors are now scrutinizing Mr. Cox's financial records to
determine whether he exaggerated enrollments and to sort out claims from
a line of creditors, said Scott Hannan, director of school fiscal
services at the California Department of Education.
"But our highest priority is securing the student records," Mr. Hannan
said. That is a sore point with Mr. Larson, who said that thousands of
students' immunization and academic records had been virtually abandoned
all across California.
Mr. Larson, superintendent of a tiny school district in Oro Grande, a
Mojave Desert village 88 miles northeast of Los Angeles that looks like
a set for "Bad Day at Black Rock," has converted a storeroom at his
school into a warehouse for the records. He has arranged for dozens of
file cabinets holding student records to be trucked to Oro Grande from
schools that have closed across the Mojave Desert, he said, but he has
no way to collect records and equipment left behind elsewhere.
Mr. Larson said Mr. Cox approached him in 2001, preaching the charter
school gospel that money spent on filing reports to government
regulators would be better spent in classrooms, and asking the Oro
Grande district to license him to found charter schools. The Oro Grande
school board approved the idea, and two other California districts
forged similar relationships with Mr. Cox between 1999 and 2001.
Mr. Cox eventually founded 60 satellite schools in low- and
middle-income communities stretching from Chula Vista near the Mexican
border to Gridley, 140 miles northeast of San Francisco, and under
California's financing formulas the state paid him about $5,000 annually
for each student he enrolled. As his business grew, he hired his wife,
son, daughter-in-law and other relatives to work at his corporate
headquarters in Victorville, near Oro Grande.
But by early 2003, Mr. Cox had become mired in several costly
confrontations with the California Department of Education; one centered
on whether 10 of his schools were in violation of a 2002 law barring
charter operators from opening schools in counties they had not
registered in. The state withheld more than $6 million that Mr. Cox had
expected to receive.
Mr. Cox sued, seeking to force payment, but lost that battle after
running up huge legal fees, and the state withheld money as a result of
other disputes, too. By the summer, Mr. Cox's financial difficulties had
grown severe, and on July 28, the trustees of one of the four charters
responded to the mounting crisis by voting to close the schools they had
licensed. Mr. Cox stalked out of that meeting and stopped responding to
most phone calls.
Within a week and a half, trustees voted to close the rest of Mr. Cox's
schools, and his second in command announced to scores of employees
gathered at the Victorville headquarters that they were out of a job.
Kim Ehrlich, a billing supervisor, said she spent the first half of
August with workers dismantling the offices around her, phoning local
utility companies across California to turn off the power at Charter
Academy schools, then lost her job.
The sudden collapse blindsided even the charter school principals.
Melody Parker, whose Village elementary school in Inglewood was one of
the most popular schools in Mr. Cox's organization, said that although
her budget had been slashed and Mr. Cox had grown aloof, she never
imagined that his organization could fall apart.
"It hit us like a tornado," Ms. Parker said. On Aug. 12, she informed
teachers that their jobs were gone, and the next day she told hundreds
of parents gathered at the school that it would not open for the fall
term. Many had still not found schools by the second week of September,
she said.
"The collapse was so disheartening,' said Dwayne Muhammad, who works in
a funeral home and whose daughter Aisha was to attend the Village's
fourth grade this fall. "Everybody began rushing to find alternate
schools."
Mr. Muhammad has visited eight schools in the weeks since, all of which
have been full, he said Monday. "We've been left by the wayside."
The nonprofit California Charter School Association said in a report
this week that 80 percent of the students displaced from Mr. Cox's
schools had since enrolled in other charter schools. Some teachers, like
Maria Boatwright, who taught first grade at the Village, have found new
jobs at other charters.
But teachers all across the state have reported difficulties in finding
new teaching positions because most schools had hired their staffs by
the time the academy collapsed, Mr. Larson said.
At the interview in Oro Grande, he produced a stack of letters from
distraught, jobless teachers. Travis D. Taylor, who taught art and
science to students at a Charter Academy school in Gridley, wrote to say
that he had not been repaid the hundreds of dollars he spent on books
and science equipment for his students.
Mr. Taylor's mother, Shelly, said that since the collapse, Mr. Taylor
had been unable to find another teaching job. With his debts mounting,
he has been harvesting rice "to keep his head above water," she said.
Mr. Cox did not respond to requests for an interview left on his
voicemail, sent by e-mail and relayed through former employees. Mr.
Larson has not been able to reach him either, he said.
One of Mr. Larson's secretaries interrupted the interview to announce
that the landlord of a school forced to close in Los Angeles was
threatening to dump desks and student records in the street to make way
for a new tenant. Mr. Larson wrestled with the notion of driving a truck
to Los Angeles himself to fetch the assets.
"There's 100 desks down there," he muttered. "What would we do with 100
desks?"
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