How DeVos Deregulation is Robbing Your Kids’ Education

First published on: http://crooksandliars.com/2017/05/how-devos-deregulation-robbing-your-kids

In September of 2016, the Office of Inspector General released a study on charter management organizations (CMOs). The report targeted their research towards how the use of CMO’s affected education programs, identified problems and recommendations. Even though these charter organizations received federal taxpayer money, Republican led states (which are the majority of states) have demanded that the federal Department of Education get their grubby little hands off of their schools. Their dreams came true with the election of Trump and his appointment of the deregulation and privatization queen of education, Betsy DeVos.

DeVos incessantly preaches about school choice, charters and voucher programs. In her uneducated opinion, she sees value only in deregulated, privately owned schools. I say uneducated because DeVos readily admitted her ignorance of the public education system during her confirmation, and she has expressed no desire nor any intention of educating herself. Her only goal is to have a Department of Education that is simply a bank for private charter schools. Her claim to support public education is an outright lie since so called public charter schools are actually privately owned and managed. She believes the Department of Education should have no say in how that money is spent, what programs it is used for or if that money is used wisely or within any guidelines.

This might seem like an interesting experiment in education reform if it hadn’t already been done. The truth is that the system DeVos is proposing already exists today because states do not bother to follow federal rules and regulations for charters receiving federal grant money. They can’t even be bothered to follow the minimal state requirements. No one is being held accountable for these violations. Regulations don’t mean a hill of beans if you aren’t able to gather data and perform audits. They mean even less when you can’t enforce penalties for violations, whether we are talking about the state or federal level. So, in practice, an unregulated education system has existed for decades.

OIG 2016 Report Summary

A CMO is an organization, whether for-profit or nonprofit, that consists of administrators that run the day to day operations of charter schools. They are responsible for hiring, firing, supplies, education programs, funding from state and federal grants, payroll etc. There is not a consistent definition of CMOs from state to state. Some states require a board of directors for each charter, while others allow a bundling of schools under one board. Additionally, states may have state education associations (SEAs) and local areas can have local education associations (LEAs).

The study found many CMOs with major “internal weaknesses.” This caused financial waste, fraud and abuse. There was a severe lack of accountability which created performance risks because no one from parents to teachers to administrators to legislators could evaluate whether these charters were even reaching their stated goals:

  1. CA, NY and FL could not tell auditors where their Individuals with Disabilities Education Act (IDEA) funding went after it was given to LEAs.
  2. PA and CA couldn’t even tell which charters were using CMOs.
  3. MI and FL knew who was using CMOs, but could not provide any other information because those CMOs would not give them the data.
  4. FL did not bother to collect any data on federal grant allocation.
  5. CA, PA and TX could not provide data on how many students were enrolled in charter schools from 2011-2013. NY did not know how many charter school students they had from 2012-2013.
  6. CMO’s, SEAs and LEAs routinely failed to report how they were using federal grants, which is a violation of the Uniform Grant Guidance rules.

How CMO’s Can Rip Off Taxpayers

According to guidelines for those receiving federal education grants, officials cannot participate in decisions if they have a personal or financial interest in the outcome. But that didn’t stop the conflicts of interest. Since states have no reporting requirements, they have no clue what types of fraud are occurring.

The most popular way some CMO officials have skimmed taxpayer grant money to charter schools is by rental agreements. CMOs often own the land and buildings that house the schools they manage. CMO’s can inflate the rental price and therefore take whatever they want for lease agreements. In an effort to distance themselves from the fraudulent inflation of lease prices for schools, CMOs will create a subsidiary company to handle the rental. That subsidiary then sells the property to a partner company that deflates the rent allowing for the parent CMO to keep the extra.

It works like this: ABC Charter School is managed by Great CMO. Great CMO leases property to ABC for $2 million/year. Great CMO creates subsidiary Screw You LLC. Screw You LLC takes over and sells property to a partner firm, You’re Suckers LLP. You’re Suckers LLP then leases property back to Screw You LLC for $1 million/year. Then Screw You LLC has a profit of $1 million/year that goes to its parent company, Great CMO because the school originally paid $2 million/year. They have just taken $1 million/year more than the value of the property from taxpayers. All the while, transaction fees and such are also added.

Other scams involve CMO officials that also own the companies supplying services to the charter. The CMO managers then are the ones drawing up the contracts with the vendors which are essentially themselves. States are not bothering to ask for itemized receipts because they have not set up any systems for monitoring how education funds are being spent. This way John Doe, who owns the textbook company, can charge and approve those charges since he’s also the CMO manager. All this comes from federal and state grants that originate from taxpayers. In TX, an attorney was a member of the CMO while providing legal services to the charter school it managed. When a vote came up regarding how much to pay him for his legal services, he never bothered to recuse himself. As a provider and a member of the school, he used both positions to set his compensation amount.

Many CMO’s will charge exorbitant amounts for their services. The industry standard is set at roughly 14% of the charter’s costs. But many CMOs have been charging as much as 40%. This leaves schools without money for supplies and basic needs. Teachers end up with less pay and benefits because funds are going to the management companies. This explains why Betsy DeVos has also spent millions trying to break up teachers’ unions.

Recommendations

OIG recommended the use of federal oversight, legislative changes, and routine audits. Consistency in the education system is needed to facilitate these recommendations. But none of this is going to happen with Trump and DeVos in office. This confusion and self dealing is exactly what they propose for our children’s education system.

The swamp is overflowing. What say you?

 

Does Billionaire Betsy DeVos Buy Her Judges? Seems So.

First published on: http://crooksandliars.com/2017/04/quid-pro-quo-betsy-devos

Since Betsy DeVos was nominated and confirmed for Secretary of Education, her political donations have been scrutinized by virtually every American news agency including us here at Crooks and Liars. She doesn’t appear to be too concerned over the attention, and she’s not shy about it either. In fact Betsy Devos stated:

“I have decided to stop taking offense at the suggestion that we are buying influence. Now I simply concede the point…We do expect something in return.”

With that in mind, I wondered who else the DeVos family has tried to influence with their money. Michigan is a state which elects judges at all levels of their judiciary: civil, probate, appellate and supreme levels.

Elections mean money.

Though judicial elections are supposed to be nonpartisan, it is no secret which justices are Democrats and which are Republicans. One look at their campaign finance records show that the justices took thousands from their respective parties in order to run their elections. Nonpartisan elections just means they don’t put an R or D behind their name on the ballot. It’s no big surprise that the DeVos family has contributed exclusively to Republican justices.

DeVos Family Businesses

The DeVos family owns a variety of companies through its various family members. The most well known company, the one that made them billionaires, is the Amway Corporation. Amway is also known as Alticor Inc. and is owned by the DeVos and Van Andel families.

Amway has been sued various times for being a pyramid scheme. They sell a variety of products all over the world via distributors. Distributors must buy the products from Amway and then sell them at a mark up to earn a profit. Distributors make more money if they recruit others to sell for them, thus the pyramid label. Distributors are also required to take seminars, which cost money, and then must purchase books and tapes from those seminars.

Many distributors have claimed that Amway products are priced too high and they are unable to sell them at a profit. Other lawsuits involving Amway or Alticor stem from workers’ compensation disputes and state tax disputes.

Buying Judicial Influence

For the purpose of this article, I only looked at contributions made to justices in Michigan by the DeVos family and not the Van Andel family or their employees. Since 1998, the DeVos family has contributed more than $600,000 to judicial candidates. That number is conservative since campaign finance laws are notoriously weak in Michigan.

Though there are limits on the amounts of direct donations to campaigns, donors can give unlimited funds and not be disclosed by funneling their money through media buys for advertising on radio and television. Donors can also give donations to PACs which can then turn around and give the money to candidates.

In Michigan, justices are not required by law to recuse themselves from cases where they have accepted money or media buys from those involved in cases they are adjudicating or from their attorneys for that matter.

Since 1998, the DeVos family has contributed to 22 Michigan justices. The Michigan state website for the judiciary does not include cases from courts lower than the appellant level. It is highly probable that many of the justices adjudicated cases involving the Devos family but were not found. All data was retrieved through the Michigan State campaign finance database.

It should also be noted that Betsy DeVos also used her pro-charter organization, Great Lakes Education Project (GLEP) to funnel millions to judges as well as legislative candidates. GLEP is funded by the DeVos family. The DeVos family also gave extensively to the Michigan Chamber of Commerce which in turn donated to judicial and legislative candidates. Whether or not any of those funds from the DeVos were earmarked for specific candidates is unknown at this time.

Lawsuits involving the DeVos where adjudicating justices reached a decision or refused to hear the case and had also received “influence” money include: Mark Metro v. Amway Asia Pacific LTDJulie M. Kenney v. Alticor, Inc.Linda J. Linton v. Alticor, Inc. and many cases where Alticor/Amway disputed taxes levied by the Michigan Department of Treasury.

Justices that have taken DeVos money while hearing cases involving their businesses.

Michigan Supreme Court

  1. Chief Justice Cliff Taylor – $43,000 and $225,000 in media buys through (GLEP).
  2. Judge Stephen Markman – $46,050
  3. Judge Robert Young – $27,800 and $1,000 through GLEP.
  4. Judge Maura Corrigan – $12,700.
  5. Judge Elizabeth Weaver – $1,000.
  6. Judge Brian Zahra – $31,450
  7. Judge David Viviano – $83,700
  8. Judge Joan Larsen – $32,500

Circuit Court

  1. Judge William Whitbeck – $2,200

Other justices that have taken “influence” money from the DeVos family.

Michigan Supreme Court

  1. Judge Colleen O’Brien – $23,800
  2. Judge Mary Beth Kelly – $27,200

Appellate Court

  1. Judge Kurtis Wilder – $25,000
  2. Judge Eric Doster – $11,800

Circuit Courts

  1. Judge Karl Weber – $500
  2. Judge Helen Brinkman – $3,000
  3. Judge Joseph Rossi – $9,000

Probate Court

  1. Judge Nanaruth Carpenter – $200
  2. Judge Tracy Vandenbergh – $120

District Court

  1. Judge Paul Beardslee – $3,000
  2. Judge Kevin Elsenheimer – $1,000

Apparently anyone filing a lawsuit against the DeVos family in Michigan is supposed to assume that the justices are above reproach in regards to their ethics. Of those known cases where the judges hearing DeVos family cases have taken their money, it did not appear that the judges disclosed any these donations to opposing parties.

Michigan residents must also question whether this “influence” money was used to “influence” justices that were hearing cases involving charter schools. I would suggest anyone living in these areas consider doing research to further determine if these justices had any involvement in DeVos business lawsuits.

Taking Betsy DeVos at her own words, it would seem that the intent of the family’s donations was to influence these justices.

 

Erasing Obama: DeVos Dismantles Protections on Student Loans

First published on: http://crooksandliars.com/2017/04/devos-continues-attack-education-student

On Tuesday, Betsy DeVos continued her assault on education by dismantling any protections for loan borrowers. Her memorandum, “Student Loan Servicer Recomplete,” effectively erases the Obama administration’s 2016 reforms on federal student loans in just four paragraphs.

Prior to 2016, the student loan providers that were contracted with the Department of Education and managed by the Federal Student Aid office operated with little to no oversight. Providers were racking up thousands of complaints regarding their loan providers and managers. Grievances usually centered around fines, being able to obtain information from the lender, how payments were handled, receiving the wrong or misleading information, bad customer service and harassing phone calls. These poor lender practices were contributing to a high number of defaults as they refused to work with borrowers.

The Obama administration recognized the need for minor reforms and organization that if implemented, would help protect borrowers and in turn assist lenders in recouping their money. The rules consisted of a Student Aid Bill of Rights:

  1. requiring the Federal Student Aid office to continually evaluate lenders that contract with the Department of Education to make sure they are meeting borrowers’ needs
  2. providing economic incentives for those lenders with high performance evaluations
  3. creating a system so that borrowers could find and understand all lender information on one website
  4. maintaining a quality assurance program so that borrowers could trust that lenders contracting with the Department of Education
  5. meet requirements requiring “timely and accurate responses” from lenders
  6. providing a feedback system for borrowers to report complaints, positive interactions and suspicious activity by lenders

DeVos’ memo erases all these basic, common sense rules for lenders. Even lenders contracted with the Department of Education can return to their old ways of harassing borrowers, misplacing payments, excessive fines, not answering borrowers’ questions and misleading and confusing their clients. Her reasoning for this abrupt turn was simply that the new rules were not working. No evidence of why or how was given.

Before becoming the Secretary of Education, DeVos did step down from various companies and boards of educational groups that would have caused a conflict of interest. However, as of the last known report in January, she had yet to divest from investments that involved lending companies or those that managed those companies. But even if she did divest, DeVos has deep ties to these lenders. It is not improbable that her latest assault is directly, financially benefiting those close ties if not herself and her family. As a government employee, paid by taxpayer money, DeVos’ first concern must always be how her actions affect the people, not how they will affect corporations or her business ties.

Republicans can never again claim to be the party of Lincoln who said, “…and that government of the people, by the people, for the people, shall not perish from this earth…” It is perishing right before our eyes because the Republicans are slaughtering it.Republicans can never again claim to be the party of Lincoln who said, “…and that government of the people, by the people, for the people, shall not perish from this earth…” It is perishing right before our eyes because the Republicans are slaughtering it.