Charter School Management Fees
As the debate over the for-profit management company Victory Schools heats up, we reviewed the fees that some charter schools pay for management services, either to a for-profit Educational Management Organization (EMO) or to a non-profit Charter Management Organization (CMO). Using data available from the 2008-2009 fiscal audits, we found that 46 schools, or 60% percent of all charter schools, had some sort of CMO or EMO. Out of the 35 schools that actually paid for these services, the cost was, on average, $1,291, or 10 percent, per pupil.
Charters with a CMO paid an average of $986, or 7 percent of per pupil funds. EMO schools paid an average of $2,146, or 17 percent of per pupil funds— a $1,160 difference. To be clear, since different services are provided by different management groups and CMOs might subsidize their services with philanthropy, the amounts paid don’t necessarily indicate over-charging for services. A full spreadsheet, with a breakdown of the schools, philanthropy numbers, and explanatory notes, is available here.
While about 40 percent of all NYC charter schools are independent schools, the rest choose to enter into a contract with either an EMO or CMO for management services. Typically, these contracts stipulate the services that the management organization will provide in exchange for a fee, which is calculated as a percentage of the per-pupil funding that a school receives.
A typical arrangement is that of Uncommon Schools Inc, which charges a new charter school 10% of their per-pupil funds. In exchange, they provide charter application and start-up help, as well as accountability, budgeting, back office, legal, fund development, marketing, and educational services once the school is up and running.
Most schools that choose to have a management organization have a CMO. The rest, about 10 percent, use a for-profit company, generally Victory Schools, which dominates the market in New York City—operating 7 of the 9 EMO charters open in 2008-2009. This small number of EMO charters in New York City makes it difficult to make generalizations about the relative difference between EMO and CMO schools.
In 2008-2009, Harbor Sciences and Arts Charter School, a CMO school, and Peninsula Preparatory Academy, an EMO school, paid the most—23% of per pupil funding—for management services. Some schools, such as those run by the Harlem Children’s Zone and Harlem Village Academies, were not charged at all for CMO services.