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Between 2003 and 2008, a Minnesota charter school executive named Joel Pourier embezzled more than $1.3 million from his school, the Oh Day Aki Charter School. While students at Oh Day Aki went without field trips and supplies for lack of funds, Pourier bought houses and cars and tossed bills at strippers. Because his school received federal funding—charter schools are privately run but many receive significant public financing—taxpayers were, in effect, subsidizing his lavish lifestyle. Ad Policy

Pourier’s case is just one of many collected in a new report by the Center for Popular Democracy and Integrity in Education that documents shocking misuses of the federal funds being funneled into the poorly regulated charter industry. The report examined fifteen states with large networks of charter schools and found that more than $100 million in public money had been lost to fraud, waste and other abuse. “Despite rapid growth in the charter school industry, no agency, federal or state, has been given the resources to properly oversee it,” the report says. “Given this inadequate oversight, we worry that the fraud and mismanagement that has been uncovered thus far might be just the tip of the iceberg.”

On Friday, lawmakers in the House largely missed an opportunity to strengthen oversight of charter schools, passing a bill to encourage charter school growth by boosting federal funding without including several amendments that were offered to increase transparency and accountability. The bill, called the Success and Opportunity through Quality Charter Schools Act, increases federal funding for charters from $250 million to $300 million. The bill received wide bipartisan support—it passed by a overwhelming 360-45— although it is being championed by GOP leaders, who tout charter expansion and “school choice” as a central part of their anti-poverty agenda. “This legislation is about upwards mobility,” said majority leader Eric Cantor, who also took the opportunity to bash New York City mayor Bill de Blasio for his position on charter school co-locations.

Very few Democrats pushed back on the legislation, in part because it includes a few provisions sought by charter critics, including allowing charters to prioritize special-needs students and English language learners in the admissions process. Still, this is the first reauthorization of the federal charter program since 2001, and the charter sector has vastly changed and expanded since then. The fact that Democrats did not rally around bids for better oversight indicates how murky the party’s education platform has grown. Charter advocates are increasingly vocal on the left, helping to secure new federal resources; meanwhile, financial and political support for traditional public schools is quietly eroding.

“We’ve essentially agreed to almost all of the elements that were in the original Republican bill and made almost no effort to level the playing field” between charters and traditional public schools, Arizona Representative Raúl Grijalva told me on Wednesday. Grijalva was one of the three Democrats who voted against the charter bill in committee. “Incrementally, more and more of the resources are going to the public charters. There are no additional resources going to the traditional public schools. They’re getting poorer and darker, in terms of the complexion of the kids that are going there.”

“Why is it that we think this is such a valid method of instruction and structure that we are willing to invest nine figures worth of federal money in those programs when we’re starving programs like Title 1 and IDEA?” asked Representative Tim Bishop of New York. Title 1 provides funding for schools with a high proportion of low-income students; IDEA supports services for special needs children. Both have seen sizable cuts in recent years.

On Thursday, the House Rules Committee refused to allow debate on amendments from Grijalva regarding open board meetings, public audit requirements and conflict of interest guidelines—regulations that traditional public schools work under. Before the full vote on Friday, lawmakers rejected an amendment to enforce conflict of interest guidelines for people affiliated with federally funded charters, and another from Democratic Representative Gwen Moore, which would have put aside 2 percent of federal grant money for charters and given it to states to use for oversight. “We often say, ‘Oh yeah, they’re going to audit themselves,’” Moore said on the floor. “With what? Audits cost money.”

Though charters receive federal funding, they are run like private businesses, and in general are not subject to the same kind of oversight as traditional public schools are. “Charter schools are public schools, so they should be held to the same accountability standards as traditional public schools, including those in the [the Elementary and Secondary Education Act] and other federal requirements,” the National Education Association wrote in anticipation of the House vote.

The Center for Popular Democracy report serves as a timely warning against using federal dollars to convert public education into an industry with inadequate regulation. “Without sufficient regulations to ensure true public accountability, incompetent and/or unethical individuals and firms can (and have) inflict great harm on communities,” says the report, which references the damage done recently by allowing industries like banking and lending to expand rapidly without an adequate safety net. The report follows a memorandum from the Department of Education’s Office of the Inspector General that states that state officials are failing “to provide adequate oversight needed to ensure that Federal funds [were] properly used and accounted for.”

Supporters of increased oversight point out that issues of transparency and accountability are distinct from larger ideological debates about charters. Grijalva told me that oversight provisions would not have interfered with the original intention of the bill, which he characterized as encouraging the expansion of charters across the country. “I think public charters are going to be difficult if not impossible to uproot, and that’s not the intention,” Grijalva said. “But if we’re playing on the same field and if this is…a philosophy of market-driven education where competition will produce the best results in our institutions, then let’s make the competition equal. Let’s make disclosure fair and open, let’s make sure that there’re no inside deals.”

Florida Representative Frederica Wilson, who has sharply criticized the charter movement in the past, explained that she voted for the bill because it offered a few minor improvements, and because defeating it would not strike a serious blow to charters. Still, she expressed frustration with the overall lack of support for traditional public education among her colleagues. “This is wrong, what we’re doing. We should be investing in public education, and not investing in charters. And I am frustrated with the White House as they step out to support charters,” she said.

President Obama and his education secretary Arne Duncan have both issued strong praise for the charter movement. Although Duncan has chastised charters for allowing bad actors to flourish among their ranks, instead of pressing for oversight he instead has encouraged charters to clean up their own act.

“The education department, from that administrative side, has been a promoter of this market-driven public education system,” Grijalva said. Referring to his colleagues on the Hill, he continued, “I think there’s been a reluctance to criticize that from some people.”

A similar bill has been introduced in the Senate, with the backing of senators from both parties. However, Senator Tom Harkin, the chair of the Education Committee, has said he is committed to overhauling No Child Left Behind through a reauthorization of the full Elementary and Secondary Education Act—which includes the federal charter program—instead of a piecemeal approach. The ESEA is long overdue for an update, and with Republicans using their unambiguous support for privatized education as a campaign platform, sooner or later Democrats will have to confront the growing chasm within their ranks.