Among the many inflammatory statements in the press release Ed Supe Diane Douglas shot off after the Board of Education employees she tried to fire were reinstated by Ducey, was this line:

“Clearly [Ducey] has established a shadow faction of charter school operators . . .”

Sounds very conspiratorial, which fits with Douglas’ Tea Party mindset. But here’s the question. To paraphrase Hillary Clinton’s assertion during the 90s: Is there a Vast Charter School Conspiracy in Arizona and around the country? Well, if hundreds of millions of private dollars spent creating astroturf groups pushing charter schools, more millions spent on election campaigns to buy candidates’ loyalty and still more millions spent directly on financial support of charter schools to give them a financial edge over “government schools” amount to a conspiracy, the answer is yes. And if the troika who formed Ducey’s education transition team is any indication — all very pro-charter, none of them a strong advocate for the school districts which educate 80 percent of our children — Ducey is deep in the bowels of the conspiracy.

Some charter schools are perfectly legit and are spending every dollar of their resources to educate their students the best way they know how, and doing a good job of it. But other people running charters are making a killing off the tax dollars they receive from the state to run their schools, and the moneyed and politically influential people who cheerlead for charter schools are aiding and abetting these profiteers by trying to hush up stories about the money machine and making sure the regulatory system is as weak and ineffectual as possible.

Here’s one example which came to my attention through a long conversation thread I participated in on a Facebook post: Primavera Online High School (not to be confused with Primavera Foundation of Tucson. There’s no connection between the two). Primavera Online High is one of those virtual schools without buildings, where students work on computers out of their homes. The student-teacher ratio is 40 to 50 students per teacher. Should online schools with half as many teachers as most other schools and no school buildings get more-or-less the same amount per student from the state as other charter schools or district schools? Well, they do, and that leaves them with a lot of money left over to play around with.

Let’s take a look at how Primavera spends its money, based on its tax returns — since it’s a nonprofit, you can find its 990 tax forms online — and the financial budget reports it submits to the state. My numbers are approximate, but the general financial trends are clear. A few folks, specifically three people, are making a bundle.

The school has in the neighborhood of 5,000 students and 115 teachers — about a 44-to-1 ratio. It spends something like $5 million on it teachers’ salaries and benefits. Yet it gets over $32 million from the state. Where does the rest of the money go? The largest single chunk, $16 million, goes to pay for software licenses. Since Primavera Online relies on computer-based education, it makes sense it would have a significant software expense, but $16 million? That’s half of its entire budget, three times what it spends on teachers. And it’s for software licenses, not software. The school doesn’t own the software. It rents it every year.

Primavera Online High, based in Chandler, buys its software from American Virtual Academy, also in Chandler. In fact, the two enterprises share a building, and that’s not all they share. The co-founders of the school are Demian Creamer and Vanessa Baviera, who also co-founded the software company. At the nonprofit online school, Demian (CEO) made $97,592 in 2012 (the most recent tax form I could find online) and Vanessa (Vice President) made $95,702. The school’s CFO, Brian Madsen, made $97,947. Brian is listed as Controller at American Virtual Academy.

On top of their nearly six-figure salaries, how much do the three of them share as profit at American Virtual Academy from the $16 million it gets when the school licenses its software? There’s no way to find out. The school may be nonprofit, but American Virtual Academy is for-profit and privately held, which means its financial dealings are private. We have no idea how much of that $16 million in taxpayer money goes toward business expenses and how much goes into Demian, Vanessa and Brian’s pockets.

A few other details about the school. It spends 18 percent of its budget on administrative expenses, significantly more than is spent by school districts. It budgets $2 million a year for advertising and promotion. To my admittedly untrained eye, the tax statements and budget reports indicate that every year the school spends significantly less than it gets from the state. How else could it have a $50 million cash balance in June, 2014?

And all of this is perfectly legit, because that’s the way the charter rules and regulations are written. Charters can be nonprofit or for-profit in Arizona, and they can pass as much money as they wish up to a for-profit software provider — or textbook provider or accounting firm — or to one of the many Charter Management Organizations, some of which basically run the schools they manage. And once the money goes behind the for-profit fire wall, it disappears from public view. None of us have any idea how much of that money goes toward children’s educations and how much fills the pockets of the business owners.

This Primavera Online High story isn’t new. It was covered in 2012 by Pat Kossan and Anne Ryman in the Republic — Arizona non-profit schools’ ties to for-profits raise flags — as part of a series about online education. And it’s not unique to Arizona or an isolated instance. This kind of profiteering runs rampant in the charter school industry. It’s part of business-as-usual — emphasis on the word “business” — at many charter schools around the country. Charter cheerleaders, members of that “Vast Charter School Conspiracy,” have no interest in curbing these profit-making ventures which make money at the expense of taxpayers and students. For many of them, having profit as a primary motive for running a charter school isn’t a bug, it’s a feature.

This article appears in Feb 12-18, 2015.

25 replies on “About That “Shadow Faction of Charter School Operators” Diane Douglas Talked About”

  4. So David W the invisible millions of dollars in profit to three people are the equivalent of salaries and benefits (all publicly available) to hundreds, if not thousands, of public employees? Gotcha.

  5. My biggest argument today about charter schools( I have many) is that they were suppose to improve education in our state. That has not happened. They were suppose to close if they didn’t show they could do it better. Well need I say more? Our standing in the nation has gone down as well as what we spend on education. So exactly why are we going to have more in Arizona? Ducey has made it clear that is his goal as well as having no intention of paying back the money the taxpayers voted for education. So how can anyone defend this system? I don’t want to hear about how the public schools waste money. Budgets are published and approved. Someone again asked me a couple of days ago how come charter schools can do it on less money. Regular public schools provide transportation, special education, nurses/health clerks, speech, occupational therapy, ESL for any non-English speaker, and they must find a way to meet the needs of all children. Charter schools do not do have these services so children who want to go there and need them, they must come back to the regular public schools. You would think they would automatically do better than regular public schools. I spent quite a bit of time online looking at grades of schools. I think it would be a good idea for those who support charter schools to examine public schools and charter schools in the same parts of down. Remember while doing so what services are mandatory at regular public schools and how they are not at charter schools. I view it as another way children get segregated and my wish is that all children grow up in diverse communities. I wonder if our governor is concerned about the education in Arizona or is really more concerned with schools and prisons making profits for individuals. That is a very sad value system if it is as it appears.

  6. I just want to add: If anybody is confused and/or wants some good information about what is happening in our country, please read”Wrapped in the Flag” by Claire Conner. She is not a pundit or politician. My cousin went to high school with her in Wisconsin and she is the real deal. She saw this coming a long time ago(educational changes, unions having almost no power, and anything that is of the government demonized) because of the home she was brought up in. You will see very clearly where the Tea Party and other ultraconservatives came from (They were always here, just dormant for a while). It is her story and very believable. She also has a website.

  7. That would explain the high IQ of educated liberals also.

    The ego-gratification associated with the regurgitation & praise model is reinforced throughout Middle and High School. It is during this time that the, ‘gifted & talented’ students are separated out from their ‘inferiors’ and taught to repeat such rubbish as:

    America’s Constitution is outdated. .
    FDR’s New Deal saved America.
    Capitalism is about greed.
    Socialism is about charity.
    Men and women are the same.
    There is no such thing as race.
    Global Warming is a proven fact.
    There are no government conspiracies.
    Guns and religion are evil.

    Is this really coming from the public school system? How much of it do you believe?

    *source unknown

  8. Gifted education is JUST AS IMPORTANT as differently abled education….to deny that shows a lack of understanding of how different children learn. To put all the abilities in one classroom and expect one teacher to be effective for all 30 or so students…well, you either deny facts or have not had children in a classroom or spoken with a teacher faced with that situation.

  9. I used to work for Primavera. Ducey had one of his campaign stops at one of our buildings. Big party it seemed like. Rich people living it up. I wouldn’t doubt that there’s something fishy going on! No doubt.

  10. David W. you are uninformed. If possible, which is usually the case, gifted and talented are taken out of classrooms for usually a class or 2 in the elementary schools a week…. usually only 1. The only children who are put in separate classes(and there aren’t many of these classes district-wide) are those who cannot have their needs met in the other model. This is the same for any special education children. They are taken out a minimal amount of time which is mandated and mainstreamed back into the regular classes as much as the children can handle. I have seen this done for such a long time and the classroom children accept all kids as having different needs very well. Children who leave and come back in the classroom an hour later(or whatever time) is hardly noticed. All children play together. Alike but different is true for all humans. This is an important message which we do not want to stop. Our world needs it desperately. We do not want these children segregated so they feel there is only one way to be a human and at the same time meet their needs as much as possible. Charter schools are segregating plus again you are justifying the possibly illegal activities and the abuse of the taxpayers’ trust.
    BTW this system is not easy for the regular classroom teacher and I applaud them daily for their very hard work and devotion to all children. They want all children to succeed.

  12. This is the very first article that I have ever read anywhere in Arizona news that even mentioned salaries of charter school administrators. Remembering back to when they started, there were many rumors. It was common knowledge that survival beyond a couple of years guaranteed steady big money. Public school superintendents’ salaries are routinely published, but why never tax supported charter school operators’ salaries? No matter what “status” they may have: IF they are getting paid with our tax money AND they refuse to report their incomes for any reason, it is simply wrong. I have suspected that many charter operators are well into 6 figure salaries ($300,000?; more?), and they have no right to hide this fact from taxpayers. Get out past and present W2s and publish individual income tax numbers – all the way back to very beginning of these “dark money” administrator salaries.

  13. JL, a few articles have been written about charter administrator and CEO salaries. The information is hard to pull together for two reasons. First, it’s not widely available like administrator and superintendent salaries in school districts. Second, it’s impossible to find if the charter is for-profit.

    Tim Steller looked at BASIS salaries in a Star column in 2009, which I quote below. He got the information from online tax forms. All non-profits have to make their 990 tax forms public. But now, Michael and Olga Block are part of the for-profit company BASISed that sits on top on the individual non-profit schools, so it’s impossible to know what these folks make. That’s a problem.

    Here’s the passage from Steller’s article. Remember, this is 5 year old information. http://tucson.com/news/local/education/pre…

    “In 2007, the last year for which the school’s 990 tax forms are available, Basis paid CEO Olga Block and Chief Operating Officer Michael Block $175,000 and $140,000, respectively. Together, the married couple who founded the school made $315,000 that year, up from $216,000 two years earlier.

    “The school hired Olga Block’s daughters in 2007, paying Petra Vyborna $23,634 as employee compensation and Michaela Vyborna $2,255 for public-relations material design.

    “For its accounting, the school turned to Olga Block’s sister in the Czech Republic. Katerina Schmidtova was paid $61,461 in 2007 for accounting services via the Internet and $36,893 in 2006.

    “Michael Block’s son, Robert, also was hired by the schools – as an employee for $8,500 in 2006 and as a provider of IT services for $13,769 in 2005.”

  14. Thanks. Nothing – IMLO – should be “impossible” to discover when public funds are shoveled into an educational operation that is available for free to any/all citizens. As evidenced by national “best schools” lists, there are some excellent charter schools in Tucson and the rest of the state. And it may be that the truly bad actors are already disenfranchised – or in good old fashioned legal trouble. But we all know exact salaries for chief administrators in school districts like TUSD, Vail, Nogales (out of 1,983). Yet the “for profit” schools are immune to taxpayer review. I have had my doubts about Supt. Douglas, but she has opened a door that promotes more honesty. We wonder if she will back down and (be forced to) change her statement in the future.

  15. Charter schools run by profit making entities are called public schools because someone cleverly named them such. Public because they are open to the public many times by invitation or acceptance and receive taxpayer dollars. More likely should be called “Private Community Schools” with a state charter.
    At least the private prisons are named properly, no one calls them “charter prisons”. AND the difference?

  16. If only you guys put as much effort into making public schools… attractive, competitive, first choice schools, instead of trying to eliminate any competition.

    Instead we see buildings falling down, buses burning and disruptive political policy forced onto unknowing citizenry and their children.

    Stop and take a good look at yourselves. Compete and provide a better product.

    Can you?

  17. Thats right Rat, if we can just get those kindergarten girls to duke it out, we will have real competition in education, just like we have real competition in health care.

  18. I get it Rat T and David W… you don’t think education is valuable. You think really caring for all children and valuing their differences is not valuable. You think you can run school districts cheaply like charter people so you must believe that the possibility of fraud is okay …. with mounting evidence it is going on. You don’t care how hard people are working to have an educated total population. You just don’t care. I think all children are worth it. You are so busy making sure that somebody is profiting off of children because somehow that makes the education better you don’t see anything else. I get it.

  20. Sorry David Safier, but every time you lump BASIS in with the the Primavero Online degree mills I find your arguments less valid.
    BASIS is a great addition to Arizona. The children who attend and graduate from those schools are better off. They may be an exception to the rule when it comes to quality charter schools in Arizona, but I have no idea due to your need, vision quest or witch hunt to tarnish their image.
    Tell me more about the other Charter Schools, write a balanced article attacking them all equally and tell me why each one does not deserve the tax credits they receive.
    Until then, I personally feel that you have a hard-on for that school and are not objective.

  21. Why are we compelled to finance “Charter Schools” in the first place? Because special interests gathered a few influential legislators and pulled off a fast one. They have been adding to ripping apart mainstream local community (elected school board) “district schools” every since. Time for a Constitutional Provision to limit funds and tax favors to “district schools” and end this chase for money given to any privately owned for profit schools. Enough already.

  22. No hakeson it’s called “winning elections.” And I would add that when Obama was elected many of us lost. We are stuck with his unconstitutional ploys of executive action and the writing of laws. He used lies to sway voters on healthcare and that is a fact.

    I wish you folks would defend the Constitution.

    Are you sure that you understand it?

  23. David W are we mixing apples and oranges. On one hand we are talking public education a state constitutional issue on the other hand we switch to Obama and national issues. I did defend the Constitution, 11 years military service.
    I have publicly sworn to uphold the Constitution several times, in the military and in elected public office, four times.
    Just because an election is won does not make one Holy or correct If you are talking about enactment of legislation for Charter Schools that’s not wrong. It is the theft of public funds from the state uniform district education system. Educating all kids equally is the state’s job.
    Schools are for our future, our children. Not for political issues, not for public officials, governors or state superintendents. Not for teachers or administrators. Playing with education funding, messing with school curriculum, “common core”, for political ideology is not sound public policy. Closing the door to an entire generation the opportunity for educations without political interference I would think should be our goal.
    On President Obama and the Patient Protection and Affordable Care Act, Obamacare, millions more people with insurance should mean something. Young folks starting in out life able to continue on their parents insurance until age 26, millions affected. People with pre-existing conditions or insurance cancellations when people get sick, millions of our fellow citizens, not strangers with health care needs protected. Low income and disabled people added to Medicaid and Medicare, millions who were without any health care plan other than hospital emergency rooms. 10-12 million folks who have sign up through state or federal health care exchanges. Is this the lie you put at President Obama’s feet. Surprise the President doesn’t sit in Congress, do you mean the boys and girls elected to Congress didn’t vote in Obamacare? Yes, there is a problem with Obamacare, the majority of American who have insurance. Many like Medicare recipients or those covered by employers, the people receiving health insurance under negotiated labor contracts have the feeling they are paying for some one else’s entitlement. Many of these people haven’t connected any benefit for them. Lower rates or at least lower increases in health insurance rates may not show up as much but the truth is it is happening.

  24. It was great to stumble upon this post. I was searching for the same form some time ago and found a great service with a huge forms library. Try PDFfiller to fill a form here http://goo.gl/BozjWH . It allows you to to fill out PDF files.

  25. I worked for FlipSwitch (formerly American Virtual Academy), which is the curriculum development company Creamer owns, and which supplies Primavera with all of its curriculum. Let’s just say things are not entirely on the up-and-up here: they hire people who wouldn’t be qualified to teach to write their curriculum (i.e.: physical trainers writing junior high school English curriculum). They hire content quality review and standards alignment people to work internally, then ignore them when they raise red flags about VERY serious issues (i.e. failure to align to State/Common Core standards, blatantly plagiarized content). The idea that this place sucks money out of the public schools to provide an education that is INFERIOR to state and national education standards disgusted me. Damian Creamer pretends to be in it for the students, but he’s just lining his own pockets. It’s truly shameful.

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