[Vision2020] NYTimes.com Article: Collapse of 60 Charter Schools Leaves Californians Scrambling

msolomon at moscow.com msolomon at moscow.com
Fri Sep 17 07:55:00 PDT 2004

Collapse of 60 Charter Schools Leaves Californians Scrambling

September 17, 2004

Ken 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

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 California.

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

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 The New York Times Company

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