Same Scams, Different Countries
Via Diane Ravitch’s blog is a link to this paper Great Britain school priveatization run amok.
In the course of the last quarter century, governmental entities in both the United States and England have sought to encourage educational innovation by creating publicly funded schools that are independent from many rules that apply to locally controlled schools. These schools are called charter schools in the United States and academy schools (academies) in England.
1 Private companies run a high percentage of these charter schools and academies. In the United States, these companies are commonly referred to as educational management organizations (EMOs).
2 In England, these organizations are called academy trusts (ATs).
3 EMOs and ATs frequently engage in related-party transactions for a number of services including educational technology, real estate, and consulting.
4 Related-party transactions are business deals between companies with special, pre-existing relationships.
5 These arrangements can occur, for example, between affiliated companies or a parent company and its subsidiaries.
6 Although related-party transactions are legal, they can create harmful conflicts of interest.
7 As a result, in both the charter and academy sectors, governmental entities have created monitoring systems to protect against wasteful and fraudulent related-party transactions.
8 However, despite the existence of these monitoring systems, numerous instances of problematic related-party transactions have occurred in charter schools and academies. Using comparative legal research methodologies, this article attempts to explain why the monitoring systems of each domain are having such a difficult time regulating related-party transactions.
The real estate deals between Imagine Schools, a non-profit EMO that operates more than
60 schools, and its for-profit affiliate, SchoolHouse Finance, are even more extreme. These
charter schools can spend up to 40% on rent, which creates a tight budget for educational
necessities, such as textbooks.
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I had to dig through the PDF to find out what the related party engagements are.
This stuff happens in both private and public schools, at least in California.
Happy Birthday Diane . . .
When I was a kid, I remember my parents and their friends debating NYC’s plan to privatize commercial trash collection. One friend won the argument. Privatizing trash collection was an invitation to organized crime to move in. He was 100% right. Organized crime took over. Prices didn’t fall. Wages did, since private trash collectors are paid less than civil servants. It took decades of prosecution and hard work to get the criminals under control. The business is still run by criminals, but it’s the polite corporate kind.
It worked so well for trash collection that various criminal types have pushed for privatization and education was vulnerable.