No Profit in For-Profit Schooling?

The accusation that a New Jersey private school operator has used taxpayers’ money to benefit relatives highlights an obvious risk of school privatization. Government money corrupts.

Daniel Greco and Philip Scardilli, co-founders and owners of the six schools in Paterson, Pompton Lakes, and Morristown, were indicted in January on charges that they stole $3.66 million from taxpayers by giving eight of their relatives and friends high-paying jobs that did not require them to work.

The schools are for students with emotional problems and learning disabilities. They receive nearly 100 percent of their budget from about 50 public school districts that contract with Windsor for specialized instruction for their students.

The districts in New Jersey pay $30,000 per pupil for 342 kids to attend the Windsor special-education schools.

I have a couple of questions.

First, without the large government subsidy would the New Jersey education market support 342 students attending a $30,000 per year school? Second, in a real free market, if parents agreed to pay $30,000, and their kids were getting a high-quality education—would it matter what the school owners pay their relatives?

The owner of my kids’ private school employs her daughter and her sister. Some of my tuition pays their salaries. I have no idea how much the owner’s relatives actually work. But as long as my kids are learning and the school personnel are attentive to my children—who they pay, is none of my concern.

This is what I don’t get in New Jersey. The school districts agreed to pay the school $30,000 per pupil. The parents and the school district are actually happy with the schooling that Windsor is providing. As a January Bergen Record column reports:

Over the years, Windsor has garnered an excellent reputation from public school educators for its state-of-the-art facilities, including computer labs.

Classes are small. A teacher and two aides work with a maximum of 12 elementary students. Kindergarten classes have a teacher and four aides. Students also receive group and individual counseling to help learn how to cope with roller-coaster emotions. Several parents of current and former students were shocked at the news.

Cheryl DeGrosa of Hackensack credits Windsor with dramatic improvements in her son Matt's grades. She often dealt with Greco and called him "one of the most professional persons I have ever dealt with.

"I have nothing but high praise for that school," she said. "I would probably be one of your more shocked parents if any of these allegations are found true. "

The school adminstrator's do not like how Windsor’s owners are spending the $30,000 per-pupil. They are making their friends and family rich:

Defendants in the Windsor Schools scandals and how much each earned from their alleged no-show jobs:

Kevin Thompson, Bloomfield $766,443

Mary Scardilli, Chatham $758,289

Janet Greco, Pompton Lakes $750,632

Arthur Scardilli, Oak Ridge $449,280

Denise Rivera, Portland, Pa. $342,868

Juliann Zuchowski, Pompton Plains $273,768

Victor Scardilli, Brick $199,562

Sydelle Scardilli, Brick $127,334

If these allegations are true, then the real question becomes why didn’t school district administrators know they were providing such a high profit margin to this company. Why didn’t they know that the company had so much extra money left over, after providing individualized service, that they could pay so many people for allegedly not working?

Perhaps a more competitive bidding process might have preempted this problem.

Maybe Edison should go to New Jersey.