Charter Institute at Erskine College offers bonus for sponsoring schools

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Tucked near the back of Vamshi Rudrapati’s contract with the Charter Institute at Erskine College is a simple statement — if the director brings in five charter schools by 2020, he’ll receive a $25,000 bonus.

Erskine’s charter institute hasn’t been around long, but its short history has been contentious from the start.

There are only three ways a public charter school can exist in South Carolina, according to state law: It must be sponsored by a local school district, by the statewide South Carolina Public Charter School District, or by an institution of higher education. The schools are public and must follow the same rules traditional public schools abide by — they are also funded by taxpayers.

The entities that sponsor charter schools are called “authorizers” and can receive up to 2 percent of each school’s state funding in South Carolina.

In prior years, Erskine College has had a history of financial woes — tax filings for the school from 2007 to 2016 show it consistently operated in the red. In 2014, the school was placed on probation by its accreditor as a result of its financial situation. After increasing tuition, slashing salaries between 5 and 30 percent, eliminating its Department of Foreign Languages, and cutting positions, the college was taken off probation a year later.

Last July, Erskine College became the first private college in the state to sponsor charter schools, and the only institution of higher education in the state to currently sponsor charter schools — South Carolina State University briefly sponsored an on-campus lab school in 2014.

Since then, state legislators have said they never anticipated that a private college would sponsor charter schools across South Carolina.

Since the charter law was written with the S.C. Public Charter School District in mind, it’s vague about what to do with higher education institutions — an amendment that was added in 2013 with S.C. State in mind.

The chairman of the state’s Senate Finance Committee, Sen. Vincent Sheheen, D-Kershaw, told members of the committee in March that there needed to be a change in how budget requests are done now that Erskine is in the mix.

“In a year, there could be 10 authorizers. We’re not going to parade 10 authorizers in front of this committee every year asking for money. We’re not doing it,” Sheheen said to the committee in March. “Erskine has requested to make a presentation. Now, my initial reaction is, I don’t really want to hear from nongovernmental entities coming before this committee asking for money. I don’t want to do it, but the situation we’re in, which was unanticipated, is so bizarre that I don’t know how else to handle it.”

Several bills were introduced in the Legislature this past session to limit how many charter schools could be sponsored by a college or limit the amount of state funding colleges receive from them, but none made it out of committee.

The state Department of Education projects Erskine’s total state appropriations budget this year to be $70.8 million, most of which will go to its schools. The institute will receive 2 percent of the appropriations.

Immediately when the college announced it would sponsor charter schools, it also said there were already two interested applicants — Cyber Academy of South Carolina, a Greenville-based virtual school, and the South Carolina Virtual Charter School, which is based in Columbia.

Both schools operated under the South Carolina Public Charter School District and had been placed in “breach” status by the district for consistently poor academic performance. The district has four performance categories — good standing, caution, breach, and revocation; a school in breach status is one step away from having its charter revoked.

Not long after the two virtual schools, seven more schools filed to transfer from the S.C. Public Charter School District to Erskine’s charter institute — three were in breach status, two were in caution, and two were not eligible for a status because they opened less than two years prior.

From the start, the S.C. Public Charter School District did not support the schools’ intent to transfer — its board chairman and superintendent cited a national phenomenon called “authorizer shopping” where failing charter schools switch sponsors to evade accountability and remain open.

The schools have argued that wasn’t their intent, but that they wanted more support from their sponsor, something Erskine promised to provide.

Since then, Erskine has approved a total of 20 schools — 10 transferred from the S.C. Public Charter School District and five had applied to the S.C. Public Charter School District in the past and were denied.

Two months after Erskine announced its institute, it also named Rudrapati its director. Rudrapati had been employed with the statewide charter district for five years up to that point and was most recently the district’s director of federal programs, earning a salary of $77,700.

Rudrapati resigned from the S.C. Public Charter School District in a late-night email to the district’s director of human resources that said it was “effective immediately (09/18/2017).”

“I have not accepted a position as of now, but I have several potential job opportunities,” Rudrapati’s email said.

The Greenville Journal sent a Freedom of Information Act request for Rudrapati’s contract as well as the contract for Cameron Runyan, CEO of the Charter Institute at Erskine.

Runyan said he does not have a contract but is an at-will employee.

Rudrapati’s contract with Erskine, which was signed on Sept. 18, 2017 — the same day he resigned from the S.C. Public Charter School District — lists him as the director of the institute with a salary of $75,000.

But near the end of his two-year contract, under a section titled “Bonus Structure,” it says Rudrapati “will be due a bonus of $25,000 at the end of the contract term if the Charter Institute at Erskine is serving as a sponsor of five or more schools at that time.”

Greg Richmond, president and CEO of the National Association of Charter School Authorizers (NACSA), said he had never heard of authorizer staff receiving a bonus for how many public schools they bring in.

“I’m more than 20 years [in this career], and I’ve never heard of that — of an individual getting a bonus based on the number of charter schools they oversee,” Richmond said. “We do surveys of authorizers and things like that, and it never even occurred to us to ask this kind of question — ‘Are you getting a personal bonus for authorizing schools?’”

NACSA is a national nonprofit with the primary goal of researching and implementing best practices for charter school authorizers.

Richmond said NACSA usually sees incentives in the percent of state funds an authorizer as a whole receives, which in South Carolina is 2 percent.

“There’s nothing noteworthy about that — 2 percent. That doesn’t mean it eliminates questions about, ‘It could still be a financial incentive to approve more schools’; that’s true, it still could be, but that’s a very typical percentage,” Richmond said. “That’s the discussion we’re normally having in this field about financial incentive and conflicts of interest — about whether that kind of fee can sometimes cause incentives or mis-incentives. Never, in all of those conversations, have I heard of someone getting a personal bonus based on this.”

Richmond said NACSA guidelines discourage authorizers from financial incentives to approve charter schools.

“A quality authorizer structures its funding in a manner that avoids conflicts of interest, inducements, incentives, or disincentives that might compromise its judgment in charter approval and accountability decisions,” Richmond said.

Runyan said the bonus was put in Rudrapati’s contract because the agency was uncertain if the institute would be viable.

“The reason that was put in there like that was that the charter institute needed an out if it wasn’t financially able to provide that — so it was always the intent of everyone involved to be able to give him that bonus on the back end, but we needed an out just in case,” Runyan said.

Cathy Hazelwood, general counsel for the state Department of Education and former general counsel for the State Ethics Commission, said the contract doesn’t violate the state Ethics Act.

“I know that there is rumbling here in Columbia about that term and that contract; however, it’s not because it’s a violation of the Ethics Act,” Hazelwood said. “There’s some sense that this is unseemly, but who knows?”

Ryan Brown, spokesperson for the state Department of Education, said the department would not comment on the contracts of leadership at local education agencies.

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