Hey everyone, Gary here, RAYGUN's grouchy CFO.
Iowa's proposed voucher system has Mike all like: "We're losing our community, we're undermining our state, blah blah blah." You can read his cry-baby blog post if you want.
I, like many in America's burgeoning Education Industry, see a money-making opportunity!
As a business cat, I wanted to see how easy it would be to:
1. Open a school in Iowa, and
2. Make a bunch of money doing it.
After researching, talking to legislators, journalists, and experts on this type of legislation, it turns out that starting a school is a little easier than I thought!
Below is a summary of what I learned. Iowa may become the newest frontier in public funding for private education.
And a healthy flow of tax-payer-funds and light regulation mean Iowa may be easier to profit from than other states with voucher systems.
Nearly 100% of parents receiving this money don't pay in taxes the amount they'll receive in vouchers.
It isn't money the parents have paid into our tax system, it's just general tax money, paid by everyone -- individuals, businesses, etc -- being sent only to parents to spend.
But: current education spending is overseen by locally-elected school boards subject to open-records laws, elections, etc.
Now, it will be given to parents who can give it to private schools, or tutors, or possible home school programs and other "educational" endeavors. Or, parents could even spend it on non-educational things, like parents in Arizona have done!
Either way: a lock of oversight is our best friend!
An expert on this type of legislation told me: "Your school doesn't have to be accredited by the state if they can find an 'independent accrediting agency'."
What luck! If we were a big player in the Education Industry, we could help start and fund our own "independent" non-profit to accredit ourselves. Or, we could find a lazy accreditor, or we could use a downright fraudulent accreditor who would just accredit us for a fee -- to find one, just use Google!
It hasn't been public school kids switching for a "better" education, it is mainly kids already in private schools funneling public money to those same private schools.
So right off the bat, our school is playing defense since most of the money will go to tuition increases at existing private schools -- womp womp.
Using Indiana as an example, even if 30% is for new schools like ours, that's still $75 million on the table. And it goes up every year: in 2021-2022, Indiana spent 44% more than in the previous year.
Iowa's current proposal gives the system unlimited access to the states' general fund, so spending can spiral fast!
Indiana's voucher is worth about 40% less than Iowa's ($5,400 per student).
In Michigan, the numbers are even bigger: $1.4 billion in state funding went to private schools just last year. And with even less oversight, the Department of Education can't tell how much of that money went to actual education versus management-company-fees. And it's hard to know how much goes to already-existing private schools.
Iowa will be nice and opaque. Governor Reynolds was the first Governor to sign the "Home School Freedom Pledge," so she seems intent on letting schools like mine do what they want.
And Iowa is planning to divert hundreds of millions of dollars to the private sector at a time when it is also planning on "consolidating" and weakening state oversight.
That's what I call a win-win.
We need to strip out as many expenses as possible. If a student needs too much, we throw them out of our school. If a program costs too much, we eliminate it. If teachers are too expensive, we hire non-certified educators to step in.
In Florida, schools have used surprise fees, like a "graduation fee" to take more money from parents.
We can apply for federal grants as well. In Michigan, 72 "schools" received $100,000 federal grants though they never opened at all!
More elaborately, the owner of a private school in Traverse City, Michigan also controlled the management company to oversee the school, then used the management company to divert nearly $1 million to his own personal accounts.
However, he'd have been on the right side of the law if he had just diverted the money to a construction company he or board members had connections to.
Either way, the fraud persisted for years before being found out.
Michigan has recently been struggling for local school boards to gain minimal access to private schools to help prevent fraud.
Indiana is currently suing an online charter school for $154 million in fraud. It has persisted for over a decade because the school used political connections to stymie investigations.
In Oklahoma, a similar case involves an online school that signed up at-risk and house-less youth, filled out their voucher paperwork, then never actually taught them.
Enough parents complaining may trigger a state investigation, but that will be a long process.
The only state requirement is that we test the kids. But we can prep them for the test, we can dismiss those who won't perform well, or we just cheat like a charter school in New Orleans (though don't do it so egregiously that we get caught!).
Though this is being implemented "for education," the programs aren't measured by educational success.
Nationally, the failure rate of schools like ours is around 37%. So the bar is set pretty low!
If someone wanted to, they could email Republican lawmakers in Iowa to let them know how public money is going to be wasted over the coming years.
For some reason, i'm putting all their emails below that can be pasted into an email that people can send with the subject, "Gary the Cat is planning on stealing taxpayer money!"
Iowa House Emails:
Iowa Senate Emails: