Arizonans for Charter School Accountability

𝐀𝐒𝐔 𝐡𝐚𝐬 𝐝𝐢𝐯𝐞𝐫𝐭𝐞𝐝 $𝟑𝟏 𝐦𝐢𝐥𝐥𝐢𝐨𝐧 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐀𝐒𝐔 𝐏𝐫𝐞𝐩 𝐜𝐡𝐚𝐫𝐭𝐞𝐫 𝐬𝐜𝐡𝐨𝐨𝐥𝐬 𝐭𝐨 𝐚 𝐬𝐡𝐞𝐥𝐥 𝐜𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧
(The complete complaint is at azcsa.org)

ASU runs and operates ASU Prep charter schools, rather than sponsoring and regulating them as required by statute. Since 2020, ASU has failed to report over $31 million in tuition and partnership payments made to ASU Prep Digital that was diverted to a shell company established by ASU executives.

ASU Prep Academy’s online school, ASU Prep Digital, flourished during the pandemic, increasing revenue from $7 million in 2019 to over $64 million in 2022. For example, ASU Prep Digital received a three-year $9 million contract with ADE to run the Math Momentum Program and was paid over $4 million to provide all online education for Pasadena Unified in 2021. Overall, ASU Prep Digital claims to have 42,000 students and 410,000 course enrollments in 23 states and 24 countries and 850 partnerships with school districts worldwide.

The revenue from ASU Prep Digital’s out of state tuition and partnerships was not reported to the state. ASU Prep annual audits disclosed that ASU Prep Digital and the 10 brick and mortar Prep schools brought in a total of $101 million in 2022, but required state financial reports only posted revenue of $83 million. Since 2020, ASU Prep has reported $31 million less in revenue in their annual financial reports than is disclosed in their annual audits.

Where did the $31 million go?

ASU Prep submits consolidated audits that include 11 charter schools and a shell corporation, ASU Prep Global, that was created by ASU executives in 2017 to divert out-of-state tuition and revenue from partnerships with districts. The $31 million not disclosed in annual financial reports apparently is being diverted to ASU Prep Global.

There are three problems here. First, all charter schools are required to report out of state tuition and revenue from services provided to other districts on their required Annual Financial Reports. Digital reported less than $2 million revenue for these services in 2022 despite an ADE payment of $3 million for the Math Momentum program and tens of millions from other “partnerships” and worldwide tuition payments.

Secondly, ASU Prep Global doesn’t physically exist. All tuition billing and contracts with other agencies make payment to ASU Prep Digital, not Global. ASU Prep Global has no educational program, no employees, no address, no website and, most importantly, no transparency for the millions of dollars being diverted to it.

Lastly, ASU Prep is not a privately owned charter school run amuck. ASU Prep Academies are the only charter schools in Arizona not sponsored by the Charter Board. According to statute and Board of Regents policies, ASU is supposed to be the sponsor and regulator for independently operated charter schools, but there is no office or committee at ASU that regulates the activities of ASU Prep. Instead, the person Michael Crow has designated to act as sponsor, Senior ASU VP James Rund, is also on the ASU Prep corporate board, as are three of Rund’s employees at ASU. The ASU Prep CEO is ASU VP Julie Young and the COO is ASU VP Amy McGrath. Together with ASU’s General Counsel, Senior VP Jose Cardenas, they form the majority on ASU Prep’s five-member corporate board. The four ASU VPs salaries, paid by ASU, topped $1.5 million in 2021.

ASU Prep combined their school board and corporate board in 2013. The ASU Vice Presidents running the ASU Prep Board do not make any operational decisions in public meetings. The Board has not hired, evaluated, or set the salary of any employee, including the CEO and COO since 2013. The ASU Prep Board approves some policies, ok’s the school calendar, and sets the date for the next meeting. Personnel, curriculum, and purchasing decisions are all made in secret by school administrators, in this case ASU vice presidents.

The University has comingled millions of dollars with ASU Prep in the creation of ASU Prep Digital’s program and platform and now is diverting millions in charter school revenue into a shell corporation completely under ASU’s control.

Arizonans for Charter School Accountability has filed a Public Monies Violation with the Attorney General regarding the co-opting of ASU Prep charter schools by the University and the laundering of millions of dollars in charter school revenue via a shell corporation created by ASU.

The Auditor General needs to complete an independent audit of ASU Prep finances 2018-2023 to determine if the revenue from ASU Prep is benefiting the charter schools or ASU.

The Legislature needs to pass legislation requiring all charter schools to be regulated by the Charter Board. The fox isn’t doing a very good job of guarding the henhouse…

Two other complaints of this kind have been submitted to the Attorney General since January 2021 with no response. Hopefully the new AG will finally investigate this misuse of public funds.

𝐓𝐡𝐞 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐆𝐚𝐩 – 𝟏,𝟐𝟎𝟎 𝐃𝐢𝐬𝐭𝐫𝐢𝐜𝐭 𝐬𝐭𝐮𝐝𝐞𝐧𝐭𝐬’ 𝟐𝟎𝟐𝟐 𝐀𝐀𝐒𝐀/𝐀𝐂𝐓 𝐭𝐞𝐬𝐭 𝐬𝐜𝐨𝐫𝐞𝐬 𝐧𝐨𝐭 𝐫𝐞𝐩𝐨𝐫𝐭𝐞𝐝 𝐰𝐡𝐢𝐥𝐞 𝟓𝟏,𝟎𝟎𝟎 𝐜𝐡𝐚𝐫𝐭𝐞𝐫 𝐬𝐭𝐮𝐝𝐞𝐧𝐭𝐬’ 𝐚𝐜𝐡𝐢𝐞𝐯𝐞𝐦𝐞𝐧𝐭 𝐭𝐞𝐬𝐭 𝐬𝐜𝐨𝐫𝐞𝐬 𝐚𝐫𝐞 𝐮𝐧𝐤𝐧𝐨𝐰𝐧

The state’s new achievement test results did not include 1,231 district students from very small districts because federal privacy laws prevent reporting subgroups less than 11 students. The 22 district schools have enrollments of less than 79 students – 4 have less than ten students.

111 charter companies with a total enrollment of 51,152, including some of the largest charter companies in Arizona, somehow avoided having their test results published. This included all of the largest online charters - Arizona Virtual Academy K-12 (8,580 students), Primavera Online (5,989 students), EdKey Arizona Distance Learning (5,066 students), and ASU Prep Digital (4,019 students). Thirty-two other charter companies with enrollments over 200 students have no test scores reported.

When ADE Accountability Division was asked for an explanation, their response on October 12, 2022 was: “We are aware of the exclusion of certain schools and records due to the redaction process. We are working to publish new assessment results as soon as possible for the field.”

The results were first published on September 7, 2022 and three months later there are no updates…Why?

𝐍𝐨 𝐀𝐙𝐌𝟐 𝐓𝐞𝐬𝐭 𝐑𝐞𝐬𝐮𝐥𝐭𝐬 𝐟𝐨𝐫 𝐓𝐡𝐨𝐮𝐬𝐚𝐧𝐝𝐬 𝐨𝐟 𝐏𝐫𝐞𝐧𝐝𝐚 𝐌𝐢𝐜𝐫𝐨-𝐒𝐜𝐡𝐨𝐨𝐥 𝐒𝐭𝐮𝐝𝐞𝐧𝐭𝐬 𝐑𝐞𝐜𝐞𝐢𝐯𝐢𝐧𝐠 𝐌𝐢𝐥𝐥𝐢𝐨𝐧𝐬 𝐢𝐧 𝐓𝐚𝐱 𝐅𝐮𝐧𝐝𝐬

Prenda Inc. is a for-profit “micro-school” that uses paid parent “guides” as teachers and has its own curriculum, that was not approved by the Charter Board. Prenda enrolls students at EdKey Sequoia Choice charter school so EdKey can collect $8,000 from the state for each Prenda student, with EdKey kicking back $4,000/pupil to Prenda, totaling nearly $20 million for 2022. EdKey provides no curriculum or instruction to Prenda students – its only responsibility is to administer state testing to Prenda students.

EdKey Sequoa Choice has its own online and in-person K-8 students, along with micro-school students from Prenda, Venture Upward, and Arizona Learning Communities. But the 2021 AZM2 state test results do not tell us how students in each of these programs did in 2021.

When we questioned the Department of Education, Deputy Associate Superintendent of Assessment Andrea Ahumada replied:
“ADE only collects enrollment data for students, we do not collect specific programs students are enrolled in or participate in within a school. Therefore, ADE is not able to disaggregate data in this way. Thank you.”

The AZM2 results show that 62% of Sequoia Choice students were tested and 36% were proficient in English and 20% were proficient in Math. How did the Prenda students do with no teachers using an online program that was not approved by the Charter Board? We have no idea. We notified ADE of this concern when the tests were being administered, but they did not see fit to track the achievement of micro-school students.

We do know that $ millions in state funds were transferred to private micro-schools with no accountability for both the use of public funds and the achievement of students.

𝐓𝐡𝐞 𝐄𝐝𝐊𝐞𝐲 𝐒𝐞𝐪𝐮𝐨𝐢𝐚 𝐂𝐡𝐨𝐢𝐜𝐞 𝐒𝐜𝐡𝐨𝐨𝐥 𝐁𝐨𝐚𝐫𝐝 𝐦𝐞𝐭 𝐟𝐨𝐫 𝟑 𝐦𝐢𝐧𝐮𝐭𝐞𝐬 𝐭𝐨 𝐚𝐩𝐩𝐫𝐨𝐯𝐞 𝐭𝐡𝐞𝐢𝐫 $𝟒𝟗 𝐦𝐢𝐥𝐥𝐢𝐨𝐧 𝐅𝐘𝟐𝟐 𝐛𝐮𝐝𝐠𝐞𝐭 𝐭𝐡𝐚𝐭 𝐤𝐢𝐜𝐤𝐞𝐝 𝐛𝐚𝐜𝐤 𝐨𝐯𝐞𝐫 $𝟐𝟎 𝐦𝐢𝐥𝐥𝐢𝐨𝐧 𝐭𝐨 𝐟𝐨𝐫-𝐩𝐫𝐨𝐟𝐢𝐭 𝐦𝐢𝐜𝐫𝐨-𝐬𝐜𝐡𝐨𝐨𝐥𝐬.

Anyone who has attended a district school board meeting knows just how long they go on to complete the business of the district – approving all expenditures for the month, hiring, firing, policies, contracts, construction, etc.

We have pointed out for years that charter school boards have no relationship to district school boards because, by law, they only set policy. All operational decisions are made in secret at corporate board meetings.

EdKey Sequoia Choice Arizona Distance Learning (ADL) is a great example. ADL has become one of the largest charter companies in the state by “hosting” micro-school students from for-profit Prenda Inc. and other “partners”. ADL enrolls the micro-school students to receive $8000/pupil in state aid and then kicks back $4,000/pupil to Prenda. The Prenda kids don’t use the ADL online program or ADL teachers – they simply rely on ADL to funnel state funds to them. A sweet deal for both.

The ADL budget has increased from $6.7 million in 2020 to over $49 million in 2022 because of the Prenda windfall. The Sequoia Choice school board met five times between July 2020 and July 2021 and never once discussed the partnership with Prenda. In fact, the ADL school board met for a total of just 30 minutes in the five meetings:

* July 9, 2020 - Approved FY 21 Budget (Budget increased from $6.7 million in 2020 to $14.5 million in 2021) and changing name of Verrado Way campus. Meeting time:𝟏𝟎 𝐦𝐢𝐧𝐮𝐭𝐞𝐬

* August 26, 2020 - Approved Covid Benchmarks, Mitigation Plan, wearing face masks. Meeting time: 𝟏𝟎 𝐦𝐢𝐧𝐮𝐭𝐞𝐬

* September 3, 2020 - Approved allowing online students to participate in athletics, Meeting time: 𝟓 𝐦𝐢𝐧𝐮𝐭𝐞𝐬

* June 22, 2021 - Approved Proposed FY22 Budget (Budget increased from $14.5 million in 2021 to $49 million in 2022). Meeting time: 𝟐 𝐦𝐢𝐧𝐮𝐭𝐞𝐬

* July 8, 2021 - Approved FY22 Budget, creating a member campus at Summit Church until new school built. Meeting time: 𝟑 𝐦𝐢𝐧𝐮𝐭𝐞𝐬

There is no attempt to even appear to have transparency in the only public meetings of this charter school. How can these be public schools when the public is completely shut out of all decision making?

Large charter companies like EdKey treat school board meetings like a joke. The Legislature needs to simply require charter school boards to also be responsible for the operational decisions of the school so, in the case of ADL, there is public access to the decisions to expend of nearly $50 million in state funds, much of which is being siphoned off to private micro-school companies.

𝗖𝗵𝗮𝗿𝘁𝗲𝗿 𝗦𝗰𝗵𝗼𝗼𝗹 𝗧𝗲𝗮𝗰𝗵𝗲𝗿𝘀 – 𝗠𝗮𝗸𝗲 𝘆𝗼𝘂𝗿 𝘃𝗼𝗶𝗰𝗲𝘀 𝗵𝗲𝗮𝗿𝗱 𝗶𝗻 𝗵𝗼𝘄 𝗺𝗶𝗹𝗹𝗶𝗼𝗻𝘀 𝗶𝗻 𝗖𝗼𝘃𝗶𝗱 𝗳𝘂𝗻𝗱𝘀 𝗮𝗿𝗲 𝘀𝗽𝗲𝗻𝘁

Arizona schools will directly receive $3.8 BILLION in Covid relief funds in the ESSER I, II, and III programs that must be expended by September 30, 2024. The large districts will receive massive wind-falls - Tucson Unified $267 million, Mesa Unified $245 million, and Phoenix Union $173 million. All district expenditures must be approved in open board meetings and must follow all state procurement laws to assure the funds are properly allocated.

Some large charter chains are also receiving a huge influx of funds:
* Academy of Mathematics and Science Inc. $40,792,083
* Leona Group $34,419,489
* Legacy Traditional $32,313,656
* Imagine $30,363,781
* EdKey $19,957,192
* AZ Community Development,
Heritage Elementary, Liberty Traditional $13,470,354
* Great Hearts. $12,024,095
* PPEP (Arizona Virtual Academy K-12) $11,423,020
* ASU Prep. $7,996,847
* Daisy (Sonoran Science) $7,002,516

But what will happen to the millions of dollars allotted to charter schools? The large charter chains approve expenditures in corporate board meetings, not in the “school board” meetings where state law says only policies have to be approved. Charter schools are exempt from state procurement laws allowing them to divert funds to owners and related party companies without bids or disclosure. Charter teachers and parents have no voice in these matters.

Federal regulations require schools receiving ESSER funds to create an expenditure plan developed with input from all stakeholders - teachers, staff, parents, unions, special education advocates, etc. This may be the one time since charters were established in Arizona in 1994 that teachers and parents can actually have input into how a charter school expends funds.

We urge all charter teachers to make sure your school holds the required public hearings for the expenditure of ESSER funds and that you encourage your colleagues and parents to be involved. Make sure these millions of dollars go to support children’s education and not corporate profits.
(See: azcsa.org for the ESSER allotment for your school and Federal rules about ESSER stakeholder input)

𝗧𝗵𝗲 𝟮𝟬𝟮𝟭 𝗔𝗭𝗠𝟮 𝗧𝗲𝘀𝘁 𝗥𝗲𝘀𝘂𝗹𝘁𝘀 𝗔𝗿𝗲 𝗜𝗻𝘃𝗮𝗹𝗶𝗱 – 𝗡𝗼𝘁 𝗝𝘂𝘀𝘁 𝗕𝗲𝗰𝗮𝘂𝘀𝗲 𝗼𝗳 𝗖𝗼𝘃𝗶𝗱 𝗗𝗶𝘀𝘁𝗮𝗻𝗰𝗲 𝗟𝗲𝗮𝗿𝗻𝗶𝗻𝗴

* Scottsdale Online Learning in the Scottsdale Unified District had 59% of students pass the AZM2 English Language Assessment (ELA) while the state average was only 36% passing. Wow! The problem is only 36% of eligible students at Scottsdale Online took the AZM2 test last spring.
* One of the top schools in the state, magnet University High School in Tucson, had an amazing 85% of student pass the ELA…too bad only 7% of students took the test.
* Arizona Connections Academy, one of the largest charter online companies, had 44% pass the AZM2 English assessment but only 31% of their students took the test.

Standardized testing is based on certain parameters that are required of all schools – everyone got the same test at the same time last year, for example. We also assume that schools test at least 95% of students, as required by Federal law. But Arizona received a waiver from the Department of Education last year to not require 95% of students to be tested. As a result, the AZM2 test was not “standardized”, with some school testing less than 10% of students. Comparing schools and districts or stating state averages is now impossible unless one considers how many students each school tested.

Which kids came to school to take the test in person? Did the good students show up to take the test…or the poor, minority, and at-risk students that might not have technology and transportation?

Overall, 54 schools that beat the 36% state average ELA score tested less than 85% of their students, rather than the 95% that is usually required. 21 schools that look like they are above the state average in English tested less than 60% of their students.

There are some real questions as to why testing numbers were so low. For example, Cesar Chavez High School in Phoenix Union only tested 16% of students while other PUHSD schools - Maryvale, Trevor Brown, and South High Schools tested 75% of students. Tucson Unified Sahuaro High School only tested 6% of students and Pueblo High School only tested 15% of students.

There is no way the 2021 AZM2 test results should be used for school-to-school comparisons. No meaningful standardized data is acquired by testing the kids that just happened to show up. Like baseball records comparing modern and historic achievements, there needs to be an * on all 2021 AZM2 test results that acknowledges that some schools tested very few of their students.

𝐒𝐭𝐢𝐦𝐮𝐥𝐮𝐬 𝐌𝐨𝐧𝐞𝐲 𝐏𝐫𝐨𝐯𝐢𝐝𝐞𝐬 𝐚 𝐌𝐚𝐬𝐬𝐢𝐯𝐞 𝐖𝐢𝐧𝐝𝐟𝐚𝐥𝐥 𝐟𝐨𝐫 𝐂𝐡𝐚𝐫𝐭𝐞𝐫 𝐒𝐜𝐡𝐨𝐨𝐥𝐬 – 𝐖𝐡𝐞𝐫𝐞 𝐰𝐢𝐥𝐥 𝐢𝐭 𝐚𝐥𝐥 𝐠𝐨?
(Full Report and database of ESSER funding for all charters and districts at: azcsa.org)

A charter owner that only spends half of state revenue to run his schools and spends the rest buying luxury homes in North Peoria is getting $2.7 million in stimulus funds. Three large charter chains that spend more on administration and real estate than in the classroom will receive an additional $30 - $40 million each. Is there any reason to believe that this windfall will really go to help educate children?

Stimulus funds to schools were provided in three separate packages known as the Elementary and Secondary School Emergency Relief plan (ESSER) – ESSER I, ESSERII, and ESSER III. The funds were allocated on the poverty level of each district/charter school based on Title I funding levels for the schools. Over $3.9 BILLION was allocated to the state to disperse to Arizona public schools to be used to offset the costs of the pandemic and assure that students catch up in missed learning caused by the shutdown. Schools have until 2024 to expend the funds.

Schools can use the funds for almost anything including buying computers, making repairs, remodeling, and even new construction. There is great concern about the accountability for these funds, especially for largely deregulated charter schools.

Of special concern is the massive windfall that three large charter chains will receive that spend more of their revenue on administration and real estate than in the classroom:
- The Leona Group will receive $34.4 million in ESSER funds, but only spent 25% of their revenue in the classroom in 2020.
- Imagine Schools will get $30.3 million but spent $1000/pupil more on real estate and administration than in the classroom in 2020 than the average charter school.
- The Academy of Math and Science leads all charter schools with $40.7 million in ESSER funds and spent $1000/pupil less in the classroom than on management and facilities in 2020.

Even worse, the three schools operated by Steven Durand (Educational Options, James Sandoval, and AIBT Charter schools) will receive $2.7 million in ESSER funds. Mr. Durand spends less than half of his schools’ revenue every year to run the schools, the rest going to increase the assets of his non-profits (so they can buy luxury homes). In today’s market, $2.7 million may only allow Durand to purchase a single new mansion to add to his collection. (See one of Durands "school sites": https://www.redfin.com/AZ/Peoria/6710-W-Calle-Lejos-85383/home/27091278)

Most charters are receiving huge windfalls as well, with charter schools collecting over $495 million in ESSER funds. There does not appear to be any oversight planned to assure that these funds go to teachers and kids and not into corporate profits or real estate equity.

All schools will be required to submit a plan for how ESSER funds will be expended, but it is unclear if the state will require a detailed accounting of expenditures. It hard to imagine how the understaffed School Finance department at ADE will even read the plans, let alone monitor spending. School districts at least must have all expenditures approved by an elected governing board in public meetings, while charter schools can make all financial decisions in private corporate board meetings with little accountability by the Charter Board, ADE, or the Auditor General.

Where will the charter schools that spend more money on administration and real estate than in the classroom expend their newly found wealth? Arizonans for Charter School Accountability calls on ADE and the Auditor General to require a detailed accounting of all ESSER funds, especially for charter schools that have a history of diverting funds into owner’s pockets.

𝐀𝐫𝐢𝐳𝐨𝐧𝐚 - 𝐒𝐭𝐢𝐥𝐥 𝐭𝐡𝐞 𝐋𝐨𝐰𝐞𝐬𝐭 𝐏𝐮𝐛𝐥𝐢𝐜 𝐄𝐝𝐮𝐜𝐚𝐭𝐢𝐨𝐧 𝐒𝐩𝐞𝐧𝐝𝐢𝐧𝐠 𝐢𝐧 𝐭𝐡𝐞 𝐔𝐒
The U.S. Census just released the 2019 Annual Survey of School System Finances and, despite the additional money the Legislature allotted for teacher salaries in 2018, Arizona is at the bottom of nearly every category of revenue and spending for public education - still.
Our Governor and Legislature’s response is to cut taxes. If we were only a more progressive state – like Mississippi. The low lights: https://www.census.gov/data/tables/2019/econ/school-finances/secondary-education-finance.html
2019 Per Pupil Rank U.S Average Arizona
Total Revenue 49th $15,656 $10,314
State Revenue 47th $7,309 $4,371
Local Revenue 34th $7,142 $4,618
Instruction 51st $7,963 $4,705
Salaries 50th $4,996 $3,225
Benefits 50th $2,206 $1,022
General Admin . 44th $257 $152
School Admin. 51st $738 $403

2019 Public Elementary-Secondary Education Finance Data View and download 2019 Public Elementary-Secondary Education Finance Data tables.

𝐑𝐨𝐛𝐞𝐫𝐭 𝐑𝐨𝐛𝐛 𝐛𝐥𝐚𝐦𝐞𝐬 𝐝𝐢𝐬𝐭𝐫𝐢𝐜𝐭𝐬 𝐟𝐨𝐫 𝐧𝐨𝐭 𝐫𝐚𝐢𝐬𝐢𝐧𝐠 𝐭𝐞𝐚𝐜𝐡𝐞𝐫 𝐬𝐚𝐥𝐚𝐫𝐢𝐞𝐬, 𝐛𝐮𝐭 𝐢𝐠𝐧𝐨𝐫𝐞𝐬 𝐜𝐡𝐚𝐫𝐭𝐞𝐫 𝐬𝐜𝐡𝐨𝐨𝐥 𝐭𝐞𝐚𝐜𝐡𝐞𝐫 𝐬𝐚𝐥𝐚𝐫𝐢𝐞𝐬. 𝐎𝐮𝐫 𝐫𝐞𝐬𝐩𝐨𝐧𝐬𝐞:
Robert Robb’s belief in the “superiority of markets in allocating resources, satisfying preferences and producing results” leaves out a key component of the free market – the control of costs to increase profits. It is ironic that Robb is so keen on school privatization yet has nothing to say about the salaries of teachers in charter schools – focusing all of his attention on district spending.

There is a reason for this. The lack of transparency in charter school operations makes it impossible for Robb to even know what charter teacher’s average salaries are, let alone how much money earmarked for teacher salaries charters have diverted to other uses.

The Goldwater Institute study by Matt Beienburg relies heavily on district average teacher salaries computed by the Auditor General over the years. The problem is the Auditor General, ADE, and the Charter Board don’t compile data on charter school spending at all. There is no data on the total number of certified teachers in charter schools, how many charter teachers have taught less than three years, or the average salary of charter teachers in Arizona this year…or any year.

Arizonans for Charter School Accountability has compiled all charter Annual Financial Reports (AFR) from 2018 to 2020, the only disclosure of spending data and teacher numbers required of charter schools. The compiled data is open sourced and is available at azcsa.org.

A comparison of charter spending on teacher salaries between 2018 and 2020 reveals that charters have put virtually none of the additional funds earmarked by the Legislature into teacher salaries:

- Charters spent $2,713/pupil on teacher salaries in 2020, only $19/pupil more than in 2018
- The percentage of certified charter teachers 2018-2020 dropped from 57% to 56%
- The median average charter salary in 2020 was $45,517 while the district median was $49,937. It is less expensive for charters to give a 15% raise to teachers
- 62 charter schools paid less than $40,000 in 2020 for average teacher salaries while only nine districts averaged under $40,000
- 287 charters out of 411 do not participate in Arizona State Retirement, saving them 12.2% of teacher salaries in required matching contributions. For example, the American Leadership Academy spent over $24 million on teacher salaries which would have required in $2.9 million matching retirement contributions by the charter. Instead, ALA paid $335,091 into their employees’ 401 K plans.

Charter schools, rather than encouraging teacher salary growth, are a main reason why teacher salaries is Arizona still lag far behind other states. Charters have “de-professionalized” teaching, allowing anyone breathing, with a fingerprint card, to be a teacher - driving down the value of the profession. There is no profit incentive for charter owners to contribute to teacher’s pensions and they are able to recruit untrained people that are willing to forego a pension in exchange for keeping 12% more salary that would have gone to the employee’s contribution to State Retirement.

Robb and Beienburg conveniently ignore how $1.7 billion in state funds were spent on teacher salaries in charter schools, while placing blame on the hated district “government schools”. It is intellectually dishonest to only research district teacher salaries simply because district data is readily available and transparent. What about teacher salaries in charter schools, Mr. Robb?
https://www.azcentral.com/story/opinion/op-ed/robertrobb/2021/05/23/school-choice-has-helped-students-why-isnt-helping-teachers/5185802001/

School choice in Arizona has helped students. Why isn't it doing more for teachers? School choice competition has raised test scores. But it has not yet improved Arizona teachers' pay or working conditions. Why is that?

Finally...The Attorney General Investigates Millions in EdKey Online Charter Kickbacks to For-Profit Micro-Schools

https://www.azcentral.com/story/news/local/arizona-education/2021/04/26/arizona-attorney-general-probes-prenda-edkey-microschools/7359925002/

Arizona attorney general launches investigation into microschool company and its partner The Arizona Attorney General’s Office has launched an investigation into microschool companies educating children with little regulation.

𝗖𝗵𝗮𝗿𝘁𝗲𝗿 𝗦𝗰𝗵𝗼𝗼𝗹 𝗖𝗿𝗶𝘀𝗶𝘀 – 𝟳𝟴 𝗰𝗵𝗮𝗿𝘁𝗲𝗿 𝗲𝗻𝗿𝗼𝗹𝗹𝗺𝗲𝗻𝘁𝘀 𝗱𝗲𝗰𝗹𝗶𝗻𝗲𝗱 𝗼𝘃𝗲𝗿 𝟭𝟱% - 𝗮 “𝗿𝗲𝗱 𝗳𝗹𝗮𝗴” 𝗳𝗼𝗿 𝗽𝗼𝘀𝘀𝗶𝗯𝗹𝗲 𝗰𝗹𝗼𝘀𝘂𝗿𝗲. (Full report and all data at azcsa.org)

Charter schools gained over 18,000 students in 2021 while districts lost over 55,000 students. Charter online schools were the clear winners, growing by over 16,000 students while three quarters of Arizona charters lost enrollment this year due to the pandemic. Gilbert Unified laid off 152 teachers because their enrollment declined 5.5% this year. 187 charter holders lost a greater percentage of enrollment than Gilbert and 78 lost more than 15% - the threshold the Charter Board uses as a red flag for being in danger of closing.

Small charter schools are hit hardest by enrollment decline – losing 20 students in a school of 100 is devastating. Most of the schools losing more than 15% of enrollment however were larger schools – 51 were over 200 students and 24 had more than 400 students.

Twenty-one charters in serious danger of failure are run by three large charter companies:
- Ten Leona Group managed schools lost a total of 2,136 students, a 27% decline. Leona Sun Valley High School lost 44% of enrollment this year
- Four EdKey schools lost 1,315 students, a 27% loss. Sequoia Pathways Academy declined by 47% in 2021
- Seven Imagine schools lost 2,418 students, 22% less than were enrolled in 2020. Two West Gilbert Imagine schools each lost 80% of enrollment this year.

These three companies have large real estate holdings that require substantial mortgage payments, forcing the companies to expend much more per pupil on their facilities than the average charter. All three have extensively refinanced their bonds so mortgage payments cannot go down.

Leona and Imagine have already cut classroom spending to the bone. Imagine spent $561/pupil less in the classroom in 2020 than the average charter and Leona has the lowest classroom spending in the state - $1,176/pupil less than the average. Imagine and Leona can’t cut teachers like Gilbert Unified – they don’t have any to cut. The dramatic decrease in revenue due to enrollment decline puts these schools in real jeopardy of closing.

Most of the other charter holders losing enrollment due to the pandemic do not have national corporate offices to bail them out. They face real challenges to keep their schools open next year.

Next, we will look at the explosion of growth in five online charter schools and the question of equity, as twice as many additional Whites students enrolled in 2021 as Hispanic students.

𝗣𝗮𝗻𝗱𝗲𝗺𝗶𝗰: 𝗦𝗲𝗴𝗿𝗲𝗴𝗮𝘁𝗶𝗼𝗻 𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗲𝘀 𝗮𝘀 𝗖𝗵𝗮𝗿𝘁𝗲𝗿 𝗦𝗰𝗵𝗼𝗼𝗹𝘀 𝗘𝗻𝗿𝗼𝗹𝗹 𝗧𝘄𝗶𝗰𝗲 𝗮𝘀 𝗠𝗮𝗻𝘆 𝗪𝗵𝗶𝘁𝗲 𝗮𝘀 𝗛𝗶𝘀𝗽𝗮𝗻𝗶𝗰 𝗦𝘁𝘂𝗱𝗲𝗻𝘁𝘀 𝐓𝐡𝐢𝐬 𝐘𝐞𝐚𝐫
(Full report with charts and maps at azcsa.org)

The segregation of students in district schools is a reality. Every year the percentage of poor, special education, and minority students increases in school districts as a result of the flight of white, middle income students to charter schools.

School districts have become increasingly minority as charter schools have exponentially expanded. White students made up 42.1% of total enrollment in districts in 2010 but by 2021 that percentage had declined to 35.8% of enrollment.

Many of those White students left district schools to go to charter schools. Between 2010 and 2021 districts have lost 84,000 White students while charter schools have added 36,000 White students.

We recently reported that districts lost 55,000 students while charter schools gained 18,000 students between 2020 and 2021. The dramatic increase in charter enrollment caused by the pandemic has further increased segregation in district schools. Districts lost 29,807 White students between 2020 and 2021. Charters enrolled 8,461 new White students last year, twice the number of Hispanic students.

We speculate that there are two major reasons why more White students enrolled in charter schools last year than Hispanics. First, there was a large increase in enrollment in online charter schools – education that requires families to have high speed Internet and a computer that may not be available to families living in poverty. 59% of all students receiving free/reduced lunch in 2021 were Hispanic, compared to 22.2% that are White.

Secondly, White students are much more likely to live near a charter school than Hispanic students. A quarter of all charter students in Arizona attend schools owned by four large charter companies that are exclusively in middle/upper income neighborhoods – Legacy Traditional, BASIS, Great Hearts, and American Leadership Academy. There is one school total from these companies in all of South Phoenix, Central Phoenix, Maryvale, Central Mesa, North Tempe, and South Scottsdale, all areas that are predominately Hispanic. (See azcsa,org for a detailed map)

The additional tragedy of the increased segregation of district schools 2010-2021 is the fact that district state revenue has decreased while charter revenue has increased. Districts with more poor students…more special education students…more minority students…and less money – a purposeful Republican plan that assures increased enrollment of White, middle class students in new, well-funded charter schools.

(Attendance data from October 1 Enrollment Reports available at: https://www.azed.gov/accountability-research/data/)

Next: We will look at 10 charter schools that gained over 23,000 students this year.