Charter School Investor: Focus on Michigan Assessments

Monday, November 20th, 2017

By Alan Wohlstetter

Michigan Assessment — The Lack of Certainty Regarding Accountability Has Real Consequences For Charter Schools

Why Financial Advisors Should Not Handle Continuing Disclosure. Municipal Finance Services agreed to assist the client in complying with its continuing disclosure obligations. The CDA for the 2013 bond offering improperly amended the filing deadline for annual reports in CDAs from bond offerings in 2005, 2008 and 2012. As a result, some investors in earlier bonds engaged in transactions without the benefit of updated financial information contained in annual reports promised in the earlier CDAs. Under SEC Administrative Proceeding File NO- 2–18139 (August 24, 2017), $50,000 in penalties were assessed against the financial advisory firm and $8,000 were assessed against each for the two individuals who worked there.

Through its easy-to-use platform, School Improvement Partnership will assist charter school borrowers in timely filing updated information as required by the SEC and the continuing disclosure agreement in place when the bonds are issued.

Michigan Passes Legislation Requiring Charter Schools In The Bottom 5% to Close. Under Michigan Law Section 380.507(5), any charter school in Michigan that finishes in the bottom 5% of academic performance, has been in existence for greater than four years, and for three consecutive years has been in the bottom 5% of all schools, is put on notice that it may be closed by the end of the current school year.

How Does Michigan Identify The Bottom 5% of Schools By Academic Performance? Currently, Michigan creates an “Overall Ranking” score for each school. According to Michigan Department of Education, this score is determined by student performance in Math, English Language Arts, Science and Social Studies. Graduation rate data is also used for high schools. Each school receives an Overall Ranking based on student achievement and student improvement. 50% of the Overall Ranking Score is based on academic achievement and 50% is based on improvement in academic performance year over year. Then, the State Department of Education standardizes each school’s score so it is sure that each school is being compared on fair basis. At this point, the Department looks at each school’s score and ranks them from highest to lowest. The schools that are in the lowest 5% are the ones put on notice of closure. Michigan Department of Education.

What Happened in 2014–2015? On The Michigan School Data website it says, “School Ranking was not calculated for 2014–15” MI School Data. As a result it is difficult to track three consecutive years of low academic performance.

Michigan Legislature Requires Changes to the Ranking System. Under Michigan Law Section 380.390, the legislature enacted a process by which the Michigan Department of Education was to implement an “A” to “F” grading matrix. The Michigan Department of Education never implemented the framework. While they have surveyed the community to determine how such a system should work, they have never fully operationalized this framework. Under the statute, the grades were to be determined based on how a school’s students performed on state tests in terms of achievement and growth over a two-year period, the percentage of students who graduate in four years, scores on Michigan’s college entrance exam, the percentage of students enrolled in courses for which the student can eventually earn college credit after completing the lessons, school culture, student retention, chronic absenteeism and parents’ assessment of the success of the school.

Authorizers Can Negotiate Their Own Stricter Accountability. Under Michigan Law section 380.503(6)(a), the authorizer’s contract with the charterschool must state the academic performance standards the school must meet. The state accountability requirements are a floor — not a ceiling — which means that the arrangement between the authorizer and the school may require that the school meet accountability measures that are more strict than state law.

Michigan Technical Academy Had Its Charter Revoked Last Year By Its Authorizer Over Low-Performance. Michigan Technical Academy would have fallen in the category of charter schools that could be closed due to its bottom 5% ranking. In anticipation of closure, its authorizer Central Michigan University shut the school. Consistent with the financing documents, the trustee intercepted the cash flow of the school to pay bondholders. This left some of the teachers in a position where there were insufficient funds to pay their salaries. Michigan Public Radio, 08/01/2017; Central Michigan University — Center for Charter Schools.

David Ellis Academy and Henry Food Academy: School of Creative Studies Elementary Were Just Put On Notice That Their Low-Performing Status Could Result In Closure. On October 30, 2017, ChalkBeat reported on the fate of the schools. “The state will now enter into negotiations with seven districts that don’t already have [state partnership] agreements. Among them are two Detroit charter schools — the David Ellis Academy and the Henry Ford Academy: School of Creative Studies Elementary.” State partnership agreements would allow the schools to escape closure by being under the direct supervision of the state under stricter accountability terms. Einhorn, Erin. “Dozens more Detroit schools added to state’s partnership list for low test scores — but forced closure is not a threat for now”. ChalkBeat, 10/30/2017.

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