Executive Summary

Damian Creamer. an entrepreneur, oversees and profits from multiple entities, Primavera online charter school, a.k.a. American Virtual LLC,  and operates under the for profit Management Group American Virtual, LLC, StrongMind, the software entity that he contracts with, and Verona Learning Partnership which was  built on the nonprofit assets built by Primavera and now has Valor Preparatory Academy charter school under its umbrella. StrongMind even has another LLC in the Philippines.

Throughout the years, he has shown great skill at using Arizona’s school choice system to massive financial advantage, even though his primary charter entity has received three consecutive academic grades of “D,” leading to the charter board to begin the process of revoking its charter.

Building a fortune without providing evidence of academic success illustrates a failure to properly oversee Arizona’s school choice system. Accountability systems in place are too weak–while the opportunity to profit is too great.

While school choice advocates like to use market analogies, Primavera represents a market failure, because the accountability needed is insufficient. That we have any of the financial records reported here is possible because some level of academic and financial reporting is required. That is not the case with Empowerment Scholarship Account vouchers.

Key Findings:

• Arizona’s online charter school funding formula is too generous compared to the formula used for brick and mortar charter schools.
• Nationally online charter schools generally show poor academic performance. Primavera appears to illustrate this national finding.
• Academic accountability is insufficient for Alternative Charter Schools in the state’s current grading system. 
• Inadequate guard rails are provided for related-party transactions, enabling an owner of a charter school to find multiple ways to profit. This may violate the charitable purpose requirements of IRS code 501(c)(3).

Recommendations:

• The State Auditor General should be directed to perform a school audit of Arizona Online Instruction (AOI) as many of the findings in their only evaluation in 2007 were never taken up and 18 years have elapsed with continued questions raised about the integrity and taxpayer accountability of AOI.
• Require that any charter school entering into a no-bid contract with a for-profit entity to provide significant services to make as part of  their contractual agreement that the for-profit entity provide a publicly accessible audit that details its finances.

About

Dave Wells holds a Ph.D. in Political Economy and Public Policy and is the Research Director of the Grand Canyon Institute. He can be reached at dwells@azgci.org or (602) 595-1025 ext. 2.

Curtis Cardine holds degrees in Organizational Management and Leadership and Change, He has over 50 years of experience in public, charter, and private sector schools and has owned several businesses. Mr. Cardine performs forensic accounting analysis of the multitude of source materials used for these reports. He can be reached at CCardine@azgci.org

The Grand Canyon Institute (GCI) is a nonpartisan, nonprofit organization dedicated to informing and improving public policy in Arizona through evidence-based, independent, objective, nonpartisan research. GCI makes a good-faith effort to ensure that findings are reliable, accurate, and based on reputable sources. While publications reflect the view of the institute, they may not reflect the view of individual members of the Board.

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