Martha Woodall — 'Investigating Charter Schools Fraud In Philadelphia' Philadelphia Inquirer reporter Martha Woodall details her ongoing investigation into Philadelphia's charter school system, where 19 of the 74 charter schools operating in the city are under investigation for fraud, financial mismanagement and conflicts of interest.
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Investigating Charter Schools Fraud In Philadelphia

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Investigating Charter Schools Fraud In Philadelphia

Investigating Charter Schools Fraud In Philadelphia

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This is FRESH AIR. I'm Terry Gross.

Charter schools were created to improve education by encouraging innovation. Many charters have succeeded. But the heads of some schools have used the charters as opportunities for personal gain through fraud, mismanagement and nepotism. In the Philadelphia area, 19 of 74 charters are under federal instigation.

My guest Martha Woodall is an education reporter for the Philadelphia Inquirer. The corruption that she uncovered at charters helped lead to the federal investigation.

Martha Woodall, welcome to FRESH AIR. Let's start with the basics. What is a charter school?

Ms. MARTHA WOODALL (Education Reporter, Philadelphia Inquirer): Well, charter schools are publicly funded schools that are overseen by their own independent boards, and they are allowed to do things that other schools can't do. They have - they're allowed to be flexible, and they don't have to follow all the regulations that a public school - a traditional public school can do. But they are public schools, nonetheless.

GROSS: And they get taxpayer money?

Ms. WOODALL: Totally taxpayer money. They usually get local money, state money and most of them also get federal money.

GROSS: So why were they first created? And what problems were charter schools intended to address?

Ms. WOODALL: Well, charter schools were - began in the early 1990s. The first one, in fact, took place in Minnesota, opened in 1992, and they were the idea behind charter schools was if only educators could be free from all these regulations and laws that had been built up over the years, they could innovate, they could do creative things with teaching and they would have better outcomes. And it was also seen as an opportunity for parents to select schools, as opposed to simply sending their kid to the school a few blocks away. They could actually choose where their student would attend school, and they were, you know, to innovate and to do things better than the traditional public schools. That was the idea.

GROSS: So before we get to some of the fraud and mismanagement and nepotism that you've investigated, let's talk a little bit about the success rate for innovation. Let's look at the Philadelphia area schools, which you've covered. Have the charter schools succeeded in being innovative and in having positive education outcomes?

Ms. WOODALL: Well, some of them certainly have, and that's one of the things that we've seen here in Philadelphia, in particular, that it's been - the results have been mixed. We have some extraordinarily successful charter schools here. We have a charter school here, for example, that is focused on art and architecture for high school students. So this is giving kids an opportunity to do things that they would probably not have at most traditional high schools.

But overall, there have been a slew of studies, including one most recently that was - and probably the most thorough - that was done by researchers out of Stanford University, where they looked at Pennsylvania charter schools. And more than half of those are in Philadelphia. And they found while we had a slightly higher percentage of very good charter schools who were outperforming traditional public schools, we also had a lot more charter schools - like more than half -where the students were doing worse than the students at the school that they'd come from.

GROSS: Okay. So let's look at some of the problems that charter schools have faced in the Philadelphia area where you've been investigating charter schools. Let me start by saying that charter schools are kind of like an entrepreneurial approach to education.

Ms. WOODALL: Right. Right.

GROSS: Where does the entrepreneurial part come in?

Ms. WOODALL: Well, the entrepreneurial part comes in, in part because they also were seen - some of the charter advocates thought, you know, if we're going to make all the schools better, there needs to be competition. They need to compete in a marketplace, in an educational marketplace. And as a result of that kind of philosophy, they attracted a lot of people who were former businesspeople who wanted to get involved in education and could apply business practices to education.

And I think what arose from that philosophy in too many cases - or an unfortunate number of cases - was that people were viewing these as businesses, and they were figuring out ways to make money and obtain large management fees. And a lot of the schools have accumulated large reserves which have been used for ways that don't really enhance the outcomes for students and sometimes enrich the people at the top.

GROSS: So let's look at some of the fraud that you found. Let's start with the Philadelphia Academy Charter School. And what were some of the problems at this school?

Ms. WOODALL: Well, at this school, which was a school that was doing pretty well academically, parents at this school were disturbed several parents in particular that there was not money for the kinds of special services their children needed. They had mild learning difficulties, and the school kept saying we don't have money for this. However, there was money that was being spent on all kinds of other issues. So they started going to meetings and raising questions at the trustees in the meeting and were basically told: We don't want you asking questions.

And so ultimately, what began as educational questions turned out to be that the founding CEO of the school, his successor was alleged to have stolen almost a million dollars from the school.

GROSS: So the parents started investigating because they felt that the money wasn't being used where it was supposed to be used for the students. What did they find? What did you find?

Ms. WOODALL: Well, they began raising questions. And what we found when we started looking into it was that the existing CEO owned the vending machines in the school, used the school's money to stock up at discount stores for candy and soda, and then pocketed all the money. I mean, he was charged with skimming something like $16,000 in vending machine proceeds. He was alleged to have stolen money from the Toys for Tots campaign that the students had collected, and using money from dress-down days, where students paid some - like a dollar or two not to wear uniforms, taking that money, as well.

They were involved in owning a building that the high school rented. They charged inflated rent amounts, and then used some of that money to buy another building that was going to be used for another entity that they controlled. They misused credit cards.

GROSS: Now, let me back up with the real estate thing.

Ms. WOODALL: Yeah.

GROSS: So explained how that worked?

Ms. WOODALL: Well, they founded a nonprofit organization that bought the building that the high school then rented. And the CEO's wife, in fact, was the head of the board. And they charged really high rental rates for the school to use the building, and then they accumulated money through their higher rates to go out and buy another building - or were planning to buy another building - that was going to be used for one of the other businesses and nonprofits that were nonprofit in name only, where they were using for financial purposes, as well.

So they were using taxpayer money that went - was supposed to have gone to the school for other purposes.

GROSS: So another thing you found was that the CEO of the school - and he was the second CEO, not the founding CEO - he was a high school graduate, a former Philadelphia police officer with no background in education, right?

Ms. WOODALL: Right. He had been briefly an uncertified shop teacher and rose through the ranks and was suddenly the CEO of the school. And that was one of the other things that the parents found most alarming, that here was someone who had no educational background who was trying to make educational decisions that were affecting the students.

GROSS: So right before the founding CEO - who is no longer the CEO at this point - was about to be indicted, he killed himself.

Ms. WOODALL: Right. Right.

GROSS: How did you feel about that? Because you had investigated this story. Your investigation led to the federal investigation.

Ms. WOODALL: Personally, I felt terrible. I had never had anything like this happen to me as a journalist. I've been a journalist since 1973. I've written about a lot of things, but nothing that I had been involved with had led to this horrible, horrible end.

GROSS: Yeah. So getting back to the school and the problems at the school, you know, we talked about the real estate deals that were inappropriate, the lack of qualifications for the CEO. There was nepotism, also.

Ms. WOODALL: Right. Both the founding CEO and, well, primarily the second CEO had a whole lot of relatives on the payroll there who were making more money and supervising people who had far more experience and more credentials than they had. And as part of the arrangement - in order to keep the school open, the Philadelphia school district, which had approved the operating charter for this school, required the top administrators to leave and required a replacement of the board, and the board then basically fired all the relatives. That was part of the deal, because they wanted to sever all ties with the families that had been involved at the charter.

GROSS: So the school still exists, but under different leadership.

Ms. WOODALL: The schools still exists under a new leadership and an entirely new board, and they have really turned things around. This happened in the spring of 2008, and they've made a lot of strides since then.

GROSS: My guest is Martha Woodall. She covers education for the Philadelphia Inquirer and has done a series of articles investigating corruption in charter schools.

We'll talk more after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: If you're just joining us, my guest is Martha Woodall, and she has investigating charter school fraud in Philadelphia, where she's covered education for the past nine years for the Philadelphia Inquirer.

When you look at all the charters in the Philadelphia area, do you see other patterns of fraud, financial mismanagement that you think illustrates some of the larger problems that charter schools are prone to? And this is not to condemn all charter schools, but just to say that they leave open opportunities for this kind of fraud and corruption.

Ms. WOODALL: Right. Nepotism, certainly. We've had cases here where large numbers of family members are on the payroll and contracts awarded, favorable contracts to relatives and friends that include leases for luxury cars. And I think part of the problem that we have found is that the boards who are overseeing these schools are not really involved as deeply as they should be. They may only meet a few times a year.

They may only - and they may be friends of the CEO. That may be why they got on the board, and therefore they're reluctant to really provide the kind of oversight that they're supposed to be providing. And I think the federal law on nonprofits has been strengthened in the last couple of years, making it clear that the people who sit on these nonprofit boards are really responsible for what happens at the nonprofits.

GROSS: In talking about charter schools, you've cited several instances of, you know, fraud, abuse, mismanagement, nepotism, other questionable practices. How much oversight is there?

Ms. WOODALL: Well, in - for Philadelphia, with our charter office of seven people, they're supposed to be keeping track of the 74 schools, and there are going to be even more schools - more charter schools in the fall to monitor.

However, because of the $629 million shortfall, the school district of Philadelphia is basically cutting its administrative staff in half. And that means, as I understand it, the person who has been in charge of that office and one of the other high-ranking people will be gone. That office will be cut in half. So there will be, I think there will be, like, really, three-and-a-half people assigned to the charter office next year. And...

GROSS: Responsible for, like, over 70 schools.

Ms. WOODALL: Right, for 74 schools. And beyond that, the school district also has its own inspector general's office, which a lot of large public agencies do, so that when - if there are allegations of fraud or abuse anywhere in the school district - whether it's absconding with money from the PTO or someone misapplying funds - that office investigates. And the Philadelphia inspector general has been deeply involved in the charter investigations, and that office of a handful of people is going to be cut in half, as well.

GROSS: Are there loopholes in charter school laws that make it easier for people to get away with the kind of fraud that you've been investigating?

Ms. WOODALL: Well, I think one of the things is the fact that you have so few people keeping track of the charter schools, they haven't - they don't have opportunities to go out and really visit the schools and pay much attention until the charters are up for renewal. So that gives, you know, several years in between where people can be getting away with things.

And in this state, also, charters have to send in, each year, a very detailed, annual report about their school's operations. A copy of that goes to the charter school office. A copy of it goes to the State Department of Education. The State Department of Education puts it on a shelf. I mean, they don't really read those reports. They say it's up to the school districts who are in charge of the charters to read the reports. But given the size of the workload, it's unclear how much time the charter office has to actually read each of those reports each year.

GROSS: So about 19 charter schools in Philadelphia are under federal investigation. This is Philadelphia and the suburbs.

Ms. WOODALL: Right. Right.

GROSS: So that's a pretty high percentage.

Ms. WOODALL: Right. Right.

GROSS: Is it like this in other cities? Is Philadelphia exceptional?

Ms. WOODALL: Well, I think Philadelphia, there's certainly more investigations going on in Philadelphia than elsewhere. I'm not sure that Philadelphia is exceptional. I think part of the fact is that the U.S. attorney's office here has been really vigilant and has made, has made charters a priority. I know that the U.S. Department of Education's inspector general put out a report in March of 2010, basically advising U.S. attorneys across the nation that charter schools were an area where they really needed to be putting a lot of attention because there were so many opportunities for fraud, and in that case that report found that there had been, you know, several investigations in California and there had been some in Texas and Ohio. But Philadelphia had the dubious distinction of having the most where there had been indictments.

GROSS: Now, your paper, the Philadelphia Inquirer, did an amazing series a couple of months ago about violence in the Philadelphia public schools. And it was really a harrowing series with attacks - describing attacks on students and teachers, by students.

Ms. WOODALL: Right.

GROSS: And is that just in the public schools? Is that going on in the charters as well?

Ms. WOODALL: I don't believe it's going on in the charters to that extent, at least I've not heard that. In fact, part of the reason why charters have expanded and grown so much in Philadelphia is parents have the perception that the charter schools are safer. And in - I think in many cases they are because charters can kind of - although they're supposed to be following due process procedures if a student is violent, it's certainly easier to remove the students who are causing trouble at a charter school and they wind up back at the traditional schools.

But parents of - even if a school is not necessarily performing very well academically, they may choose to put their child in a charter school because they have a perception things are safer.

GROSS: And you say that perception is probably accurate.

Ms. WOODALL: Mm-hmm. At least as far as we know.

GROSS: As you know, there's a running debate about whether the charter schools are hurting the public schools or not. The argument that they're hurting schools goes something like this, that the charter schools are taking the most gifted students away from the public schools and they're taking the students who have the most incentive and whose parents have the most incentive to get a good education, and those people are pursuing charter schools. So while the charter schools are getting the best students, they also are dumping the most problematic students back into the public schools because they can, the regulations are more flexible for expelling students.

So if you measure back-to-back the performance of the charter schools and the public schools, the charter schools have an inherent advantage. So having covered public schools and charter schools over the past nine years, do you have any thoughts on whether the charter schools are creating problems for the public schools or not, whether they're putting public schools at a disadvantage, whether they're depleting the public school system?

Ms. WOODALL: I think that certainly there's an advantage that comes from having a parent who is active and engaged enough to have made a decision to place a student in a charter school. I think that's probably an inherent advantage. Because as we know, the lack of parental involvement is one of the biggest issues facing traditional public schools. But at the same time, I think where the argument is, in terms of perhaps undermining public schools, has the most merit, it has to do with the finances. And I know that charter advocates point out, well, the money is following the student, it's public money, that doesn't harm the traditional public schools because they're not educating that student. Well, that's true to an extent. A lot of the charter school students maybe never attended traditional public schools. Sometimes they come out of the non-public school world and they're entering - this is the first time their education is being funded by taxpayers.

In addition to that, since most charters - at least in Philadelphia, for example - don't draw, they're not just neighborhood schools, they draw from throughout the city, you're picking one student from this zip code, one student from that zip code and putting them in a charter school classroom that doesn't really mean that any of the sending schools can close a classroom, because they're not coming in in neat 25 to 30 student allotments. And that - for that reason, that it's - the resources are being diminished for the traditional public schools.

GROSS: So you have less money per classroom in a lot of places.

Ms. WOODALL: Right. Right. Right, right.

GROSS: My guest is Martha Woodall. She covers education for the Philadelphia Inquirer and has done a series of articles investigating corruption in charter schools.

We'll talk more after a break.

This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is Martha Woodall, an education reporter for the Philadelphia Inquirer, who has written extensively about fraud in charter schools. Nineteen charters in the Philadelphia area are under federal investigation.

Looking at the big picture, how would you say the reality of charter schools compares to the vision of charter schools in the early 1990s when they were created?

Ms. WOODALL: I think that some have clearly met the goals of experimentation and better student outcomes and opportunities for parents to choose. But I think that a lot of people would say that in terms of the academic outcomes it hasn't been as dramatic an improvement overall nationwide as had been anticipated.

GROSS: What about the most innovative schools? Have we seen in some charter schools, like specialized schools for art and architecture or science, that these charter schools are coming up with models that could be applied to other schools, including public schools?

Ms. WOODALL: Right. Yeah, I think that's absolutely true. And here in Philadelphia we have a charter organization that began with one school here that's now expanded to a lot of other schools, and it's the Mastery Charter Schools, and they've been enormously successful and they have also managed to be successful - they have raise additional money, so they're able to actually, they have a lot of grant money and private foundation support so that they're actually able to spend more on services for students than the traditional public schools. And their approach is not only a strong rigorous college prep background that has been successful, they have also developed this whole emotional and social learning curriculum that is part of the student's growth and performance that really deals with like character and how people behave. And in terms of discipline, they use a restorative justice practice. And I think those kinds of approaches have helped them be academically successful.

GROSS: So the school that you were just talking about is called...

Ms. WOODALL: Mastery Charter School.

GROSS: And is that the school that Oprah Winfrey gave like $1 million to?

Ms. WOODALL: Yes. Her Angel Network gave them $1 million last year, and they have received some federal grants as well and some other private funds to really expand. And they're involved now, after having had one of their own successful high school charter schools, they have been involved in doing turnarounds for the Philadelphia school district, where they take really troubled schools and turn them into charters. And they started doing this several years ago and they - last year they had one of the first graduation for one of their turnaround schools where they go from seven to 12, and their students, they had more than, you know, 90 percent of their students going to college in neighborhoods where fewer than 20 percent of the students from the traditional public high schools were going to college.

GROSS: What's the moral of that story?

Ms. WOODALL: Well, there again, they have this whole approach involving the social and emotional learning. They have a longer school day, a longer school year. They have mentors. They provide mentors for the high school students and they have to - and they are required to conduct like high school internships. I mean they have like a very complete philosophical program that has worked out really very well for them. And they're also among the schools where the teachers actually are paid at a better rate. They work hard for their money but they tend to be paid better than the traditional public schools.

GROSS: Okay. Martha Woodall, thank you so much for talking with us.

Ms. WOODALL: Well, thank you so much for inviting me, Terry.

GROSS: Martha Woodall covers education for the Philadelphia Inquirer. You'll find a link to her series about charter schools on our website,, where you can also download podcasts of our show.

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