Citizens' Issues
Charter School Power Broker Turns Public Education In to Private Profits

Baker Mitchell is a politically connected North Carolina businessman who celebrates the power of the free market. Every year, millions of public education dollars flow through Mitchell’s chain of four nonprofit charter schools to for-profit companies he controls


Versions of this story were co-published with The Daily Beast and the Raleigh News & Observer.

In late February, the North Carolina chapter of the Americans for Prosperity Foundation — a group co-founded by the libertarian billionaire Koch brothers — embarked on what it billed as a statewide tour of charter schools, a cornerstone of the group's education agenda. The first — and it turns out, only — stop was Douglass Academy, a new charter school in downtown Wilmington.

Douglass Academy was an unusual choice. A few weeks before, the school had been warned by the state about low enrollment. It had just 35 students, roughly half the state's minimum. And a month earlier, a local newspaper had reported that federal regulators were investigating the school's operations.

But the school has other attributes that may have appealed to the Koch group. The school's founder, a politically active North Carolina businessman named Baker Mitchell, shares the Kochs' free-market ideals.  His model for success embraces decreased government regulation, increased privatization and, if all goes well, healthy corporate profits.

In that regard, Mitchell, 74, appears to be thriving. Every year, millions of public education dollars flow through Mitchell's chain of four nonprofit charter schools to for-profit companies he controls.

The schools buy or lease nearly everything from companies owned by Mitchell. Their desks. Their computers. The training they provide to teachers. Most of the land and buildings. Unlike with traditional school districts, at Mitchell's charter schools there's no competitive bidding. No evidence of haggling over rent or contracts.

The schools have all hired the same for-profit management company to run their day-to-day operations. The company, Roger Bacon Academy, is owned by Mitchell. It functions as the schools' administrative arm, taking the lead in hiring and firing school staff. It handles most of the bookkeeping. The treasurer of the nonprofit that controls the four schools is also the chief financial officer of Mitchell's management company. The two organizations even share a bank account.

Mitchell's management company was chosen by the schools' nonprofit board, which Mitchell was on at the time — an arrangement that is illegal in many other states.

Charters are privately run but government-funded schools that are supposed to be open to all. Policymakers and many parents have embraced charters as an alternative to poorly performing and underfunded traditional public schools. As charters have grown in popularity, an industry of management companies like Mitchell's has sprung up to assist them.

Many of these companies are becoming political players in their states, working to shape the still-emerging set of rules charters must play by. A few, including Mitchell's company, have aligned themselves with influential conservative groups, such as Americans for Prosperity and the Koch-supported American Legislative Exchange Council, or ALEC.

This new reality — in which businesses can run chains of public schools — has spurred questions about the role of profit in public education and whether more safeguards are needed to prevent corruption. The U.S. Department of Education has declared the relationships between charter schools and their management companies, both for-profit and nonprofit, a "current and emerging risk" for misuse of federal dollars. It is conducting a wide-ranging look at such relationships. In the last year alone, the FBI sent out subpoenas as part of an investigation into a Connecticut-based charter-management company and raided schools that are part of a New Mexico chain and a large network of charter schools spanning Illinois, Indiana and Ohio.

Two of Mitchell's former employees told ProPublica they have been interviewed by federal investigators. Mitchell says he does not know if his schools are part of any inquiry and has not been contacted by any investigators.

To Mitchell, his schools are simply an example of the triumph of the free market. "People here think it's unholy if you make a profit" from schools, he said in July, while attending a country-club luncheon to celebrate the legacy of free-market sage Milton Friedman.

It's impossible to know how much Mitchell  is taking home in profits from his companies. He's fought to keep most of the financial details secret. Still, audited financial statements show that over six years, companies owned by Mitchell took in close to $20 million in revenue from his first two schools. Those records go through the middle of 2013. Mitchell has since opened two more schools.

Many in the charter-school industry say that charter schools are more accountable than traditional public schools because, as Mitchell is fond of saying, "parents can shut us down overnight. They stop bringing their kids here? We don't get any money."

Moreover, Mitchell said, students at his two more established schools have produced higher test scores at lower costs than those in traditional public schools: "Maybe Baker Mitchell gets a huge profit. Maybe he doesn't get any profit. Who cares?"

Continue Reading….



UK threatens Internet ‘trolls’ with two years in jail

Victims have long been calling for police and prosecutors to take online abuse more seriously and lawyers had anticipated an increase in sentences for those convicted of trolling


People found guilty of Internet 'trolling' in the United Kingdom (UK) could be jailed for up to two years under government proposals, following a number of high-profile cases of abusive and threatening behaviour on Twitter.


Justice Secretary Chris Grayling told the Mail today newspaper: “This is a law to combat cruelty — and marks our determination to take a stand against a baying cyber-mob.”


There has been increasing concern in Britain about the growing scourge of Internet “trolls” who post hate-filled messages on social media, often threatening their targets.


The parents of missing girl Madeleine McCann are among the most recent victims, and last month a man was jailed for 18 weeks for what prosecutors described as “a campaign of hatred” against a female lawmaker.


“These internet trolls are cowards who are poisoning our national life. No-one would permit such venom in person, so there should be no place for it on social media,” Grayling said.


“That is why we are determined to quadruple the current six-month sentence.”


Victims have long been calling for police and prosecutors to take online abuse more seriously and lawyers had anticipated an increase in sentences for those convicted of trolling.


“There is a public interest in having people put away for a long time,” Chris Holder, of London law firm Bristows, told AFP earlier this month.


“It is putting someone in fear of their life and fear of physical harm. I think the law will develop and the sentences will go up and up.”


However, some lawyers and freedom of speech campaigners have warned that criminal sanctions should be the last resort.


“Do we want to criminalise every social conduct that we find problematic?” Barbora Bukovska, a senior director at campaign group ARTICLE 19, said earlier this month.


Prosecutions can currently be brought under a number of different laws, but the Crown Prosecution Service (CPS) last year introduced guidelines to address any confusion.


It said messages sent via social media could be a criminal offence if they contain “credible threats of violence” or target an individual in a way that “may constitute harassment or stalking“.


The government proposes to amend two existing laws to extend the maximum jail term and also the time limit for prosecutions, from six months to three years.


Need to fix gas price rates in rupees

A guestimate would put the dollar-rupee conversion rate to be around Rs63. What will happen if the crude oil or gas price goes up dramatically due to unforeseen circumstances, including war-like situation in the Middle-East or elsewhere? Once this price is gazetted, it would actually become due for revision only in April 2015


Practically six months after it was due to have been put into effect on 1st April, gazetted and yet not made applicable due to ensuing elections, and subject to debates and discussions, the National Democratic Alliance (NDA) government at last has settled the score to set the domestic gas price to $5.6 per unit, not $8.4 as indicated earlier by the former government. Is this a concessional, discounted rate?


Anyway, this works out to be roughly 33% higher than the price in operation at $4.2 but becomes effective from 1st November. This price of $5.6 would be reviewed every six months so as to "ensure stability in the market". This move may have been caused by the fall in the international market price and the glut situation in the crude oil business.

A guestimate would put the dollar-rupee conversion rate to be around Rs63. What will happen if the crude oil or gas price goes up dramatically due to unforeseen circumstances, including war-like situation in the middle-east or elsewhere? Once this price is gazetted, it would actually become due for "revision" only in April 2015.


According to the press reports available, the new price of $5.6 per mmBtu is based on gross calorific value, which includes "impurities". However, the effective price for net calorific value would work out to be $6.17 per unit, as stated by the Finance Minister, Arun Jaitley. The fuel retail price, from now onwards, would be "linked" to the global oil prices.


The press reports further indicate that the critical part of the announcement is the decision to allow a premium on this price to gas produced in ultra-deep waters, deep waters and technologically "challenging" areas. This new price, it is stated, does not apply to D1 and D3 fields of Reliance Industries Ltd and that the differential amount would be deposited in Gas Pool Account till the outcome of the arbitration process.


These two fields are located in the deep water fields of Kaveri-Godavari basin. It remains to be seen whether the gas produced from these fields would attract a premium over $5.6 per mmBtu, because of their location?


On the whole, prima facie, it would appear that this long over due revision would benefit ONGC, Oil India, Cairn and Gujarat State Petroleum Corporation besides Reliance when applicable. At the same time, this will also give much needed reassurance to international investors that the government wants to encourage them to participate in such exploratory programmes.


It may also be remembered that Reliance inability to supply the contracted quantity earlier, due to "geographical surprises", which is under arbitration, needs to be kept in abeyance because they were supposed to make the loss of the quantity not supplied earlier.


In announcing this price, the government also deregulated the diesel prices and it was reported in the media that IOC chairman confirmed the system of revising prices every month, based on the international price fluctuation. The revision of price would have a rippling effect on freight rates thus helping to moderate inflation while the subsidy burden on fertiliser may increase but which could be offset by the higher income obtained due to higher price for the government. Would the government consider a reduction or withdrawal of fertiliser subsidy or even permit the manufacturers to decide the price issue?


This price fixation will be considered a Diwali gift for the promotion of business and industry and one may expect it to be welcomed in Dalal Street.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


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