USA: Collapse of 60 Charter Schools Leaves Californians Scrambling

Ben 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

"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

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?"

Copyright 2004

AMP Section Name:Privatization

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