SC lawmakers are cracking down on charter school sponsors over improper spending concerns

This is the second installment in Unchartered Territory, an ongoing series by The State Media Co. about South Carolina’s changing charter school landscape.

House lawmakers, concerned that South Carolina’s largest charter school district may be violating the spirit if not the letter of the law, are moving quickly to shore up ambiguities in the state’s decades-old charter schools law.

The move comes amid reporting by The State Media Co. that revealed leaders at the Charter Institute at Erskine, a publicly-funded school district that oversees more than two dozen charter schools across South Carolina, were quietly working to launch three charter schools in Tennessee.

Charter Institute CEO and Superintendent Cameron Runyan said the group ultimately suspended its plan out of a desire to refocus their attention on South Carolina. But the out-of-state venture has raised questions about the potential misuse of public dollars and employee time.

In a letter South Carolina House Education Chair Shannon Erickson wrote to Runyan last month, she expressed concern that he was “skating on very thin ice and at best using gray areas of law to do it.”

“I believe in school choice,” Erickson, R-Beaufort, said in an interview with The State newspaper last week, “but I also believe in fiscal responsibility and duty to the funds being spent in an appropriate way.”

Runyan has denied any wrongdoing.

Charter schools are privately-run public schools that are exempt from certain regulations to encourage innovation in the way students are educated. They operate under a contract, or charter, with an authorizer, such as the Charter Institute at Erskine, that oversees them.

The powerful House budget committee last week passed a one-year measure called a proviso to prohibit charter school authorizers from spending state dollars on anything other than the fulfillment of their statutory duties. The measure specifically prohibits authorizers from establishing or managing schools in other states.

Another proviso, inspired by Erskine College’s accreditation problems, permits charter schools sponsored by a college or university to switch authorizers in the event their sponsor is sanctioned by its accrediting body. Erskine, a private evangelical Christian college in Due West that established the Charter Institute, is on warning status with the Southern Association of Colleges and Schools Commission due to finance and governance issues.

Assuming the full House adopts the provisos as part of its spending plan, the one-year measures will still need to clear the Senate, which introduced its own charter school reform legislation last year.

The crackdown on charter school authorizers is aimed not only at forestalling any expansionary ambitions, but also at clarifying inconsistencies and omissions in South Carolina’s Charter Schools Act, which doesn’t contemplate many of the complex relationships and potential conflicts of interest that have emerged in the years since its passage.

“These are areas the law is silent,” said Erickson, who authored the provisos. “It never entered our minds that we would need to have these particular safeguards in place.”

The House Education chairwoman said that while she’d prefer to pass permanent charter school reform legislation, as the Senate has discussed, she proposed the provisos in the interest of expediency.

The Senate’s charter school reform bill has yet to get a vote in the upper chamber.

“That bill hasn’t made it to us yet in the House,” Erickson said. “So as just a precaution and kind of a clarifying scenario, I felt it was important for us as a state body to say: South Carolina funds are supposed to be spent on South Carolina schools.”

Questions remain about Teach Right Traditional Schools

Runyan, a former Columbia city councilman who helped found the Charter Institute in 2017, has insisted that public dollars were not spent on the plan to open schools in Tennessee.

In a recent interview with The State newspaper, Runyan asserted that he and his Charter Institute colleagues, with the support of the authorizer’s board, helped with the effort at the request of out-of-state interests whose identities he declined to reveal.

While charter school management can be a lucrative business, Runyan said he wasn’t compensated for his work on the project.

“If anything, it’s been a financial drain,” he said, explaining that he’d sunk his own money into the venture.

The group behind the proposed network of Tennessee schools, known as Teach Right Traditional Schools, submitted paperwork in December declaring its intention to open schools in the Nashville, Knoxville and Chattanooga areas. Teach Right also launched a website and Facebook pages for each of its schools around the same time and began promoting a Fall 2025 opening date.

Documents the group filed in Tennessee lay bare the vital role that Charter Institute employees played in the project.

The authorizer’s leaders not only founded the charter network, they ran it. Teach Right Traditional Schools’ governing body was composed of high-level Charter Institute employees and associates, and its primary contact, the Charter Institute’s director of data and research, listed the Institute’s Columbia office as her mailing address.

Teach Right USA, a teacher training nonprofit the Charter Institute formed last year, was slated to manage each of the Tennessee schools, documents show.

When confronted about the connections, Runyan denied that the Charter Institute and Teach Right USA had anything to do with the Tennessee schools project.

“At the end of the day, there’s just no there there,” he told The State earlier this month. “There’s been no connection between these organizations other than the fact that there’s some folks who have agreed to volunteer.”

Erickson, the House Education chairwoman, said she first heard about the Teach Right schools project from a constituent who read about it on a Knoxville news website.

A mutual connection relayed her misgivings about the project to Runyan, who emailed Erickson in late January in an effort to allay her concerns.

“I want to assure you that no South Carolina taxpayer funds are involved in any efforts that may be occurring beyond the borders of the state,” Runyan wrote Erickson in a Jan. 23 email obtained by The State. “To emphasize our commitment, the Institute Board of Directors recently adopted a resolution reaffirming their ongoing commitment to spend all state funds in accordance with state and federal laws.”

Erickson responded four days later to express her continued unease with the Charter Institute’s behavior.

“Sadly,” she wrote, “the information you provide is suspect and a resolution from your board after the fact feels contrived.”

Erickson went on to caution Runyan that the Charter Institute’s funding could be affected if it didn’t manage the state’s money with the utmost fidelity and welcomed hearing his plan to implement financial systems that “operate in a clean, transparent and accountable way.”

Teach Right USA under question

Meanwhile, the Charter Institute’s support of Teach Right USA, the teacher training organization identified in documents as Teach Right Traditional Schools’ parent organization, may itself violate the Charter Schools Act, according to lawyers consulted by The State.

An audit of the Charter Institute’s finances shows it paid more than $140,000 of the fledgling nonprofit’s expenses last year before entering into a formal loan agreement with the organization for an additional $500,000.

As of last June, the Charter Institute had advanced Teach Right USA $343,855, according to the audit. It’s unclear exactly how Teach Right USA spent the money or whether it has continued to draw from its line of credit over the last eight months.

Neither the Charter Institute nor Teach Right USA responded to questions about the organization’s finances.

Charter school authorizers are required by law to use the public dollars they receive exclusively to fulfill their statutory obligations, which are restricted to reviewing charter school applications, negotiating charter school contracts and providing oversight and accountability to the schools they sponsor.

The use of taxpayer dollars to seed a private nonprofit, whether its purpose is to train teachers or open schools in another state, is inconsistent with the language of the statute, said University of South Carolina law professor Derek Black.

“When you receive money from the state to do Job 1, you don’t get to take it and do Job 2 and say, ‘Yeah, it’s still good for the state,’” Black said. “It is, at very best, an extremely creative use of state funds.”

Runyan, who takes a more expansive view of the law, said he saw nothing wrong with loaning taxpayer dollars to Teach Right USA, which offers a host of services to prospective teachers, schools and school boards.

“We put resources into things like this all the time,” he said in an interview earlier this month. “We’re going to continue to put resources into things like this because that’s our job, that’s what the state of South Carolina has charged us with.”

Financing an organization like Teach Right USA, Runyan said, actually fulfills the Charter Institute’s requirement under the law to open and support quality schools across the state.

“You’ve gotta have teachers, you’ve gotta train administrators,” he said. “And that all is under the umbrella of what we are required to do under state law. We are completely comfortable with that. Our lawyers are completely comfortable with it.”

Erickson, however, has her doubts.

She said she’s broadly supportive of Teach Right USA’s mission and open to discussing legal ways to fund such a group, but that Runyan and the Charter Institute should have consulted state lawmakers if they felt hamstrung by the law and needed more financial flexibility.

“You need to come to the table and say, ‘This law says this. We need it to be able to do some of this,’” she said. “Then let the General Assembly decide if that needs to be a tweaked policy. That’s how those things work.”