Today, Sahan Journal is publishing a story about how Minnesota charter schools award $132 million in contracts which are often hard to discover. This story is the result of an investigation that spanned eight months. 

Let’s go back to the start. When I joined Sahan Journal in September 2023, our education reporter Becky Dernbach told me about an allegation of accounting fraud at a Brooklyn Park charter school. We combed through school-board minutes and legal filings to trace the footprint of a popular charter-school accounting firm that had later collapsed. 

It became clear to us during that process that no one was really tracking charter-school contracts; we had to piece together the details ourselves.

That reporting experience inspired today’s investigative story, where we’ve taken a wider look at how charter schools distribute contracts — and how much money is involved. 

IN BRIEF: WHAT YOU NEED TO KNOW ABOUT CHARTER-SCHOOL CONTRACTS

Five takeaways from Sahan’s investigation of a Brooklyn Park charter school — and a $132 million loophole in Minnesota’s anti-corruption laws

Nearly 70,000 Minnesota kids attend charter schools, and two-thirds of them are students of color. That’s more students than attend any single school district in the state, and more than the combined undergraduate and graduate students at the University of Minnesota’s Twin Cities campus. But despite their large educational footprint, charter schools are rarely subject to in-depth reporting from local newsrooms. Minnesota charter schools, like charter schools across the country, operate with a great deal of autonomy. In my four years reporting on education for Sahan Journal, I’ve learned that autonomy sometimes means no one steps in when problems arise.…

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Becky found that Noble Academy, a charter school in Brooklyn Park, awarded a multimillion-dollar management contract to its founder and former superintendent. She also learned that charter schools do not have to follow the same anti-corruption rules as public-school districts when awarding contracts. 

So was this an isolated case or business as usual? To put the question another way: How much state money are charter schools distributing through these large contracts? 

$132 million: How did we get there?

To estimate how much taxpayer money is being spent on contracts, we started by creating a charter-school database. Under Internal Revenue Service (IRS) rules, every tax-exempt organization is required to file a Form 990 annually that reports its activities. Minnesota charter schools, as federally registered nonprofit corporations, are required to report their five highest-compensated independent contractors that receive more than $100,000 from the school.

A sample Form 990 table that reports compensation for independent contractors.

We collected all 180 Minnesota charter schools’ federal tax identification numbers using ProPublica’s Nonprofit Explorer database. With that in hand, I wrote a script that scrapes the most recent Form 990s of every school from the IRS’s tax-exempt organization database. We also reached out to a few charter schools that were delayed on their Form 990 filings and asked for missing information. 

Having gathered 172 of these documents, I fed them into an AI-driven tool called Pinpoint, which extracts data from hundreds of documents and tabulates specific information. Within an hour, we were able to get a clearer picture of the types of contracts awarded, whom the money went to, and more.

We then calculated the total compensation of contractors receiving more than $100,000, for each charter school. (We excluded food-service contracts because they involve federal funds; here, the schools must follow federal procurement laws.)

Adding all those numbers together, we saw that Minnesota charter schools gave out at least $132 million in state funding to independent contractors in the 2021-22 tax year alone. 

We had an answer to our initial question about the scope of spending. And it felt like a pretty big sum.

Without the help of AI, Becky and I would have spent days sifting through the tax documents to try to assemble this number. 

It is important to note that the $132 million figure does not encompass the total amount of contracts awarded. Charter schools are required to disclose only the top five contracts with over $100,000 in compensation. (A $50,000 contract for, say, textbooks or staff training, wouldn’t show up here.) We also identified 37 large contracts (over $100,000) that did not list the services provided or the specific compensation amounts. Therefore, the full extent of these outside contracts remains unclear.

In much of our main story, we ended up examining one large contract awarded by Noble Academy. But Noble Academy is just one of 180 charter schools currently operating in Minnesota. Becky’s reporting found that the state has been looking into several other contracts at Minnesota charter schools.

Since we started asking questions about this issue, the Minnesota Department of Education proposed a bill that would require charter schools to follow a competitive bidding process for all contracts over $25,000.

The Legislature is expected to vote on it this week.

SAHAN INVESTIGATES: MINNESOTA CHARTER SCHOOLS

Cynthia Tu is the data reporter and AI specialist at Sahan Journal. She analyzes public datasets, uncovers hidden patterns and trends in numbers, and tells stories with compelling data visualizations....