Charter schools funded by public education dollars are an increasingly popular alternative to traditional public schools. As the charter movement has spread across the country, many schools have hired outside management companies to handle their administrative needs. Such outsourcing, while often beneficial, sometimes gives rise to conflicts of interest, self-dealing and other problems.

Marian Wang tells ProPublica's editor-in-chief Steve Engelberg about a chain of North Carolina charter schools that she spent several months examining. For years, the schools’ founder, a man named Baker Mitchell, was both a member of the board overseeing the schools while also running the for-profit management company that handles key functions for the schools. The National Association of Charter School Authorizers, a group that seeks to improve the oversight of charter schools, has called that sort of dual role an egregious conflict of interest.

Mitchell's management company, Roger Bacon Academy, receives roughly 16 percent of the schools' annual revenues. Over the past six years, the schools have paid nearly $20 million to Mitchell’s management company and another for-profit firm he controls, which leases building and equipment to the schools.

Mitchell, who believes that the free market will help reform education, has said that parents at his schools can vote with their feet if they’re dissatisfied with the product. He’s tangled with state regulators, who he said he believes are restricting the free market through overregulation of charter schools. Recently, Mitchell’s charter schools were in a dispute with regulators, who had ordered the schools to turn over salary data for key administrators paid by Mitchell’s management firm.

"There's a recognition in North Carolina, and in many other states, that in order to make sure that public dollars are being spent wisely, we have to have some sort of visibility into these companies," Wang says.

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