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9 Phila. charters under U.S. probe seek Race to the Top money

By Martha Woodall>BR> Inquirer Staff Writer

Nine Philadelphia charter schools under federal investigation for possibly misspending taxpayer money hope to obtain even more public funding. The schools are included in Pennsylvania's statewide application for $400 million under the federal Race to the Top program, The Inquirer has learned.

But even as the state Department of Education retools its application to meet a June 1 deadline, officials say they do not plan to remove those nine charters from the bid for money to turn around failing schools, revamp teacher evaluations, and help struggling students.

Acting Education Secretary Thomas E. Gluck said it would be unfair to bar schools when no wrongdoing had been found.

"Race to the Top is about bringing bold reform to schools so that all students achieve at high levels," Gluck said in a statement to The Inquirer. "It would be wrong to deny this opportunity to the students because of alleged mistakes made by the adults who operate and govern the charter school."

Action can be taken later, he added, if improprieties are discovered.

"Obviously, if there is criminal activity involved," Gluck said, "consequences could be as severe as revocation, but it's too early to tell."

The federal investigation began in May 2008, shortly after The Inquirer reported allegations of fiscal mismanagement, nepotism, and conflicts of interest at Philadelphia Academy Charter School in the Northeast. The probe widened as the newspaper disclosed problems at other charters and now includes 18.

If the state's Race to the Top bid is approved, the nine charters could share between $1.2 million and $1.6 million, state records show.

The state seeks wide participation, and the charters volunteered.

Fifty-nine charter schools offered to join in when the state first applied for funding in January. In all, 24 of Philadelphia's 67 charters signed up, as did 120 districts across the state. Others may join, state officials said.

All participants commit to work to meet state goals, including ambitious student-achievement targets over the next four years.

Officials did not believe that including the nine charters would jeopardize the application, said Leah Harris, a state Education Department spokeswoman. The probe and the schools' commitments to academic reform "are separate issues," she said.

Timothy M. Allwein, assistant executive director of the Pennsylvania School Boards Association, agreed.

No one at the nine schools, he said, has been found guilty of wrongdoing. And, he said, the state's chances improve if its application shows broad participation.

"How they score is based on the number of schools that buy into this," Allwein said.

Ted Kirsch, president of the American Federation of Teachers Pennsylvania, took a different view.

"Anybody who is under investigation for possible misappropriation of public funds should not be included in the proposal until the investigation is completed," he said.

U.S. Education Department officials said they did not screen applications for possible wrongdoing, and the criteria don't address fraud.

"States are being evaluated on the educational reforms they are proposing, not on other issues," a department spokesman in Washington said.

Although the U.S. Department of Education Inspector General's Office is monitoring the spending of federal stimulus money, it does not examine Race to the Top applications. The office would review any allegations of fraud, waste, or abuse referred by the department, spokeswoman Catherine Grant said.

She has declined to comment on the federal investigation in Philadelphia of at least 18 charter schools. But sources with knowledge of the probe say the Inspector General's Office is involved.

The Race to the Top program was established with $4 billion in economic-stimulus money to encourage states to expand the role of charters and take bold steps to improve schools.

Pennsylvania was a finalist in the first round, but only Delaware and Tennessee were awarded money. An additional $3.4 billion will be distributed in the next rounds.

Eight of the nine charters that have applied for extra federal funding were among the schools whose financial practices City Controller Alan Butkovitz criticized in April. Federal authorities have subpoenaed five years of their financial records.

Federal investigators began examining one of the nine - New Media Technology Charter School - nearly a year ago to determine whether charter money had been improperly used to pay expenses at a private school, a restaurant, and a health-food store with ties to the school's former leaders.