7/6/2016 1 Graduate School of Education Balancing the Business of Charter Schooling & Public Interests Bruce D. Baker 7/6/2016 1 Graduate School of Education Drawing on Two Reports • The Business of Charter Schooling – With Gary Miron – Published in Dec. 2015 by NEPC – Outlined policy structures enabling problematic business practices • Forthcoming report on Charter Expansion in Major Urban Centers – Economic Policy Institute – Evaluates long term impact on major urban districts 7/6/2016 2
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7/6/2016
1
Graduate School of Education
Balancing the Business of Charter Schooling & Public Interests
Bruce D. Baker
7/6/2016 1
Graduate School of Education
Drawing on Two Reports
• The Business of Charter Schooling
– With Gary Miron
– Published in Dec. 2015 by NEPC
– Outlined policy structures enabling problematic business practices
• Forthcoming report on Charter Expansion in Major Urban Centers
– Economic Policy Institute
– Evaluates long term impact on major urban districts
DISTRICT OF COLUMBIA PUBLIC SCHOOLS_DC COLUMBUS CITY SCHOOL DISTRICT_OH
KANSAS CITY 33_MO TOLEDO CITY_OH
DAYTON CITY_OH PHILADELPHIA CITY SD_PA
CLEVELAND MUNICIPAL_OH INDIANAPOLIS PUBLIC SCHOOLS_IN
Charter Expansion by Geographic Host District
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Who’s Running Charter Schools?
Dominant Managers by State and Local Market (by Enrollment Served)
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Other
Imagine Schools, Inc.
Leona Group, LLC, The
PPEP and Affiliates
Great Hearts Academies
Legacy Traditional Charter School
Benjamin Franklin Charter School
Eduprize Schools, LLC
BASIS School, Inc.
Choice Education and Development Corporation
Daisy Education Corporation
Arizona Community Development CorporationKingman Academy Of Learning
Pointe Educational Services
Connections Education LLC.
EdKey
Learning Matters Educational Group
Pinnacle Education, Inc.
Rose Management Group
Center for Academic Success, Inc.
Career Success Schools
American Basic Schools, LLC
Arizona Agribusiness and Equine Center, Inc.
Mosaica Education, Inc.
Espiritu Community Development Corporation
SABIS Educational Systems, INC.
Academy of Tucson Inc.
Sequoia Choice
Schools Lllp
The Charter Foundation, Inc.
Educational Services of America, Inc.
CAFA, Inc.
Heritage Academy, Inc.
LEAD Charter SchoolsParagon Education CorporationCompass High School, Inc.
International Commerce Secondary Schools Inc.Omega SchoolsBright Beginnings School, Inc.Skyline Schools, Inc.
Country Gardens Educational Services, LLC
Tucson International Academy, Inc.Self Development Charter School
Arizona Academy of Leadership, Inc.White Hat Management
Montessori Charter School of Flagstaff, Inc.Blueprint EducationChampion Schools, Inc.The Edge School Inc.TAG Elementary, Inc.
Humanities and Sciences Academy of the United States,
Inc.
Southern Arizona Community Academy, Inc.Educational Impact, Inc.Eastpointe High School, Inc.Cornerstone Charter School, Inc.Academy of Excellence, Inc.StarShine AcademyGAR, LLCDesert Springs AcademyNew Visions Academy, Inc.
Montessori Schoolhouse of Tucson, Inc.Allsport Enterprises, IncEast Valley Academy
Who Runs Arizona Charter Schools?Distribution of Enrollments 2011‐12
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Other
The Partnership for Los Angeles Schools
K12 Inc.
Aspire Public Schools
Green Dot Public Schools
Innovative Education Management, Inc.
Alliance for College‐Ready Public Schools
Options for Youth Inc
ICEF Public Schools
KIPP Foundation
Gateway Community Charters
High Tech High
Partnerships to Uplift Communities, Inc.
Edison Learning, Inc.
Magnolia Educational & Research Foundation
Camino Nuevo Charter Academy
Celerity Educational Group
High Desert Partnership in Academic ExcellenceKing/Chavez Public SchoolsCalifornia Montessori ProjectThe Accelerated SchoolConnections Education LLC.Leadership Public SchoolsRocketship EducationSt. HOPE Public SchoolsEnvision SchoolsEducation for ChangeTracy Learning CenterGolden Valley Charter Schools
IncValue SchoolsThe Rocklin Academy
CORE (Community Options for Resources in Education)Bright Star SchoolsPara Los NinosFive Key Charter Schools, Inc.
Community Learning Center Schools IncEnvironmental Charter Schools
National University Charter Academy
American Indian Public Charter SchoolDiploma Plus, Inc.Imagine Schools, Inc.The Learner‐Centered School, Inc.
Who Runs Illinois Charter Schools?Enrollment Distributions 2011‐12
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National Heritage Academies
Other
Leona Group, LLC, The
CS Partners, LLC
Choice Schools Associates LLC
Global Educational Excellence
Mosaica Education, Inc.
Helicon Associates
Charter School Administrative Services
New Urban Learning
Varner and Associates International LLC
Prep Net LLC
Hamadeh Educational Services, Inc.
Romine Group, LLC, The
Innovative Teaching Solutions
Midwest Management Group Inc.
White Hat Management
SABIS Educational Systems, INC.
Woodbridge Management &
Education Services
Solid Rock Management Company
Smart Schools Management
Schoolhouse Services and Staffing, Inc.
Advance Educational Services
Bardwell Group
Lakeshore Educational Management, Inc.
Summit Management Consulting
Education Associates
Imagine Schools, Inc.
Youth Visions Solutions
Transitions Consultants LLC
Evans Solution Management Company
Education Management and NetworksCreative Urban Education, Inc.
American Institutional Management Services
Visions Education Development Consortium LLC
Foundation for Behavioral ResourcesNataki Talibah SchoolhouseThree Pillars ESPEdtec Central, LLCConnections Education LLC.K12 Inc.Midland Charter Initiative
Black Star Educational ManagementSVRC Industries, Inc.Concept SchoolsO.P. Twelve, Inc.EightCAP Inc.Peak PerformanceHanley‐Harper Group, Inc
Educational Services of America, Inc.
Who Runs Michigan Charter Schools?Enrollment Distributions 2011‐12
Who Runs New York Charter Schools?Enrollment Distributions 2011‐12
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Other
White Hat Management
K12 Inc.
Imagine Schools, Inc.
Concept Schools
Constellation Schools, LLC
Mosaica Education, Inc.
Connections Education LLC.
Summit Academy Management
Edvantages
eSchool Consultants
Leona Group, LLC, The
Buckeye On‐line School for Success
Institute of Management and Resources, Inc.
Edison Learning, Inc.
Breakthrough Charter Schools
SABIS Educational Systems, INC.
KIPP Foundation
ISUS Internationa
l
Global Educational Excellence
Who Runs Ohio Charter Schools?Enrollment Distributions 2011‐12
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Other
K12 Inc.
OmniVest Properties Management, LLC
Connections Education LLC.
Mastery Charter Schools
Universal Companies, Inc.
Charter School Management Inc.
Propel Schools
ASPIRA Association
Edison Learning, Inc.
Scholar Academies
KIPP Foundation
Edsys, Inc.
Three Cord Inc.
Imagine Schools, Inc.White Hat Management
Mosaica Education, Inc.
Who Runs Pennsylvania Charter Schools?Enrollment Distributions 2011‐12
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Other
Cosmos Foundation Inc.
KIPP FoundationIDEA Public Schools
Uplift Education
YES Prep Public Schools
Texans Can Academies (formerly America Can)
Life School
Rylie Family Faith Academy
Responsive Education Solutions
Neighborhood Centers Inc.
Shekinah Learning Institute, Inc.
Varnett Schools, Inc.
Winfree Academy Charter Schools
Student Alternatives Program Inc.
Faith Family Kids, Inc.
School of Excellence in EducationRichard Milburn Academy, Inc.Educational Leadership, Inc.
Raul Yzaguirre School
for Success
Riverwalk Education Foundation,
Inc.
Honors Academy
Connections Education LLC.
Jubilee Academic Center, Inc.
Golden Rule
Schools Inc.
Association for Development of Academic Excellence
Southwest Winners Foundation, Inc.
South Texas Education Technologies, Inc.
One Stop Multiservice Charter SchoolAcademicaTexas Boys ChoirNew Frontiers Charter School,
Inc.
Salvaging Teens at Risk, Inc.Educational Resource Center, Inc.
Two Dimensions Preparatory Academy, Inc.
Democratic Schools Research Incorporated
Tekoa Academy of Accelerated StudiesExcel Academy
Democratic Schools Research InstituteOrenda Education
East Waco Innovative School Development, Inc.
L. Lowell Byrd Memorial Education and Community Dev.
Cor.
Bay Area Charter School, Inc.Por Vida, Inc.Calvin Nelms Charter SchoolsGulf Coast Council of Laraza, Inc.Trinity Charter SchoolsConnections Between Cultures,
Inc.Panola Charter School
Who Runs Texas Charter Schools?Enrollment Distributions 2011‐12
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Who are Imagine, NHA, CSUSA, White Hat?
• Renaissance Academy for Math and Science of Missouri, Inc. v. Imagine Schools, Inc. (2014). http://docs.justia.com/cases/federal/district‐courts/missouri/mowdce/4:2013cv00645/110158/95
• Ohio Supreme Court justices deliver blistering attack on charter schools, White Hat Management.(2015). http://www.ohio.com/news/break‐news/ohio‐supreme‐court‐justices‐deliver‐blistering‐attack‐oncharter‐schools‐ white‐hat‐management‐1.624356
• Crouch, E. (2011). Imagine Schools’ real estate deals fuel company growth. St. Louis Post Dispatch http://www.stltoday.com/news/local/education/imagine‐schools‐real‐estate‐deals‐fuel‐company‐growth/article_dbf9b959‐0c73‐586c‐97e7‐6fca3a729b39.html
• For more on National Heritage Academies and Charter Schools USA see: – Kelley III, T. A. (2014). North Carolina Charter Schools’(Non‐) Compliance with State and
Federal Nonprofit Law. NCL Rev., 93, 1757 (p. 1813).
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Public Spending, Private Gain?
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Financial Management Practices
• “Finding” $ in human resource intensive industries– Skimming/transferring ‘overhead’ expenses– Cutting personnel expenses
• Employing expensive staff (turnover as a feature, not a “bug”)
– Avoiding “higher cost” populations• Those covered by fed statutory obligations
– Taxing/recapturing employee wages
• Where those resources go…– Capital acquisition
• Use of public resources through private entities for high cost debt financing of capital (to be owned by private entity)
• Some (many?) management companies operate their own real estate arm
– Other self‐dealing • Lease arrangements (related to capital acquisition)• Contracted services
– Curriculum, Staff D, Consulting with “related parties”
• Company store
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Revenue Enhancement Examples
• Ceasar, S. (2014). Charter schools break law by making parents volunteer, report says. Los Angeles Times. http://www.latimes.com/local/lanow/la‐me‐ln‐charter‐schools‐volunteer‐20141120‐story.html
• Lee, T. (2013). Chicago charter schools rake in thousands in disciplinary fees. MSNBC. http://www.msnbc.com/melissa‐harris‐perry/chicago‐charter‐schools‐rake‐thousands
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KIPP “enhances” revenue, but then gets smaller share into instruction (>Admin)
Harmony sacrifices teacher wages for high admin and very high facilities expenses.
Revenue/Spending Variation by Operator Type: Texas
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Graduate School of EducationCompensation Differences by Operator Type: Texas
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Schools operating w/large shares of Turkish labor compress overall staffing costs by
paying very low/flat wage
CMOs like KIPP tend to pay high wage for longer hours/days, but have
relatively inexperienced teachers
Graduate School of Education
Data Source: salaries modeled using statewide “Fall Staffing Report” data. Salaries estimated as a function of degree level and years of in-state experience, excluding administrative job codes, and using data from 2010 to 2015. Predictions based on teachers holding a bachelors degree in 2015.
$‐
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Predicted Salary (at Constan
t Degree/B
A)
Years of In‐State Experience
Major CMO vs. Gulen Affiliated Charter Teacher Salaries in New Jersey
Major CMO KIPP/TEAM
Major CMO UNCOMMON/NorthStarGulen Bergen Arts & Sciences
Gulen Paterson Arts & Sciences
Gulen Passaic Arts & Sciences
Gulen Central Jersey College Prep
Gulen Paterson Science &Technology
Compensation Differences by Operator Type: New Jersey
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Average NJ charter overhead approx. double that of districts[in many cases, inclusive of exorbitant lease expenses]
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$4,391
$4,426
$4,851
$4,002
$3,266
$4,084
$4,315
$3,003
$3,346
$3,145
$2,954
$2,691
$2,303
$1,993
$2,327
$1,894
$1,698
$1,936
$3,343
$879
$1,523
$1,866
$2,012
$1,587
$1,190
$2,500
$2,888
$2,053
$2,875
$2,364
$1,415
$2,289
$2,459
$665 $3,460
$2,413
Great Oaks Charter School
New
Horizons Comm. C
S
TEAM Academ
y Charter School
Pau
lo Freire CS for Liberty Ed
Gray CS
Maria L. V
arisco‐Rogers CS
Peo
ple's Preparatory Charter…
Merit Prep CS of New
ark
New
ark Ed
ucators Charter…
North Star Acad. C
S of New
ark
Discovery CS
Marion P. Thomas CS
Roseville Community CS
Robert Treat Academ
y CS
University Heigh
ts CS
New
ark Legacy CS
New
ark Prep
NEW
ARK CITY
Administrative & Plant Expenses per Pupil in Newark 2014‐15
Admin 14‐15 Plant 14‐15
[1] Indicator 8. New Jersey Department of Education. Taxpayers Guide to Education Spending. http://www.nj.gov/education/data/[2] Indicator 10. New Jersey Department of Education. Taxpayers Guide to Education Spending. http://www.nj.gov/education/data/[3] Summary File. New Jersey Department of Education. Taxpayers Guide to Education Spending. http://www.nj.gov/education/data/
Net=+$10.6m[$246 pp]
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Using high interest loans & public dollars* to purchase land/buildings
for private** entities (sometimes, from ourselves***)
*Charter school funding intended for school operating expense**Sometimes the left arm buying for the right ***Sometimes, the district as “seller” making sweetheart deal with CMO/EMO as “buyer”
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Often left & right hand of same (closely
related) organization
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$4,300
$1,210 $940
$768 $677 $432 $391
$214 $183 $173 $108 $79 $67 $53
Cumulative Debt (PAR – $Millions) Financed by Rating[Over $50 Million]
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$0$0
$39
$0 $0$0$0$0$0$0$0$0$0$6$0$0$13$8
$0$0$7$9
$46$49
$201
$23$16$11
$0$0$0$11
$0 $0$0$0$5$11
$0$0
$78
$0
$43$36
$76
$97
$61
$144
$41$53$59
$44
$23$36
$24
$0
$57
$36
0
50
100
150
200
250
2015 2020 2025 2030 2035 2040 2045 2050
Amount in M
illions
End Year
Four Largest Charter Revenue Bond Issuers Nationally [by total dollar value]
& Bond Maturity Dates by $$
Colorado Educational and Cultural Fac..
Florida Development Finance Corporati..
Phoenix Industrial Development Author..
Pima County Industrial Development Au..
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The Company Store
“Taxing” employee wages to benefit “related” business endeavors
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Imagine, if you will…
• Rutgers GSE establishes a charter school in NB– Chair of board is RU‐GSE Dean & governing board members include several
faculty
• Charter board agrees to hire only teachers w/bachelors degrees, but requires that they obtain specific RU‐GSE offered master’s degrees within first three years of employment – Offers “cost‐sharing” agreement (subsidized with outside grant/private
contribution), w/teacher obligated to pick up difference.• Cost sharing only available if degree obtained through RUGSE
– Teachers leaving before meeting their contractual obligation (3yrs teaching & Master’s completion) required to pay back GSE (privately subsidized) share to GSE
• For convenience, courses will be taught on site, in the charter school, by recent completers of GSE masters programs who work in the school.
• [peers teaching peers]
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Founders / Leaders
Charter School Graduate SchoolOf Education
Facility
Staffing
New Faculty!
Total Relay GSE compensation (2013) = $276,602
Total Relay GSE compensation (2013) = $160,440
Total Uncommon Schools compensation
(2014) = $223,227
Uncommon Knowledge &
Achievemen
t Inc.
Zearn
Relay GSE & Related Entities
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From Relay web site
From Uncommon Schools faculty handbook
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CMO and Subsidiary School (Acknowledged as Related)
UK&A Formally Related to Relay GSE (Acknowledged)
Uncommon Schools (IRS 990)
North Star Academy (NJ CAFR) Relay GSE(IRS 990)
Uncommon Knowledge & Achievement Inc. (IRS
990)
Zearn LLC (IRS 990)
Board Members
Norman Atkins (Chair) Rick Rieder (Chair) Larry Robbins (Chair) Norman Atkins (CEO) Norman Atkins (Chair)
David Cooper Michael Lytle David Levin (Secretary)[1] Timothy Saintsing (COO, Prior)
Evan Rudall (CEO)
Donald Katz Robert Howitt Arthur Levine (Trustee) Thackston Lundy (COO, Current)
Shalinee Sharma (Secretary)
Charles Harris Gia Rys Julie Mikuta (Trustee) Robert Karr (Treasurer)
Pearl Kane Nicole Albano David Saltzman (Treasurer) David Levin
Robert Karr Paul Bambrick‐Santoyo Dacia Toll (Vice Chair)[2] David Saltzman
Rondo Moses Trisha Scipio‐Derrick Carlos Watson (Trustee) Dirk Ziff
Robert Jain Ravi Bellur Dacia Toll
Brooke Reid Scott Sleyster Larry Robbins
Neal Moszkowski Nkyah Taylor
Employees & Officers
Brett Peiser (CEO) Carolyn Hack (Treasurer) Norman Atkins (President)
Carolyn Hack (CFO/COO) Michael Ambriz (COO) M Yvonne Chao (CFO)
Paul Bambrick‐Santoyo (Managing Director, Newark)
Julie Jackson (Principal) Piper Evans (Director of Finance)
Julie Kennedy (Managing Director) Mike Mann (Head of School) Timothy Saintsing (COO)
Joshua Phillips (Managing Director) James Verrilli (Community Member)
Mayme Hostetter (Dean, Relay NY)
Julie Jackson (Managing Director) Michael Larosa (CIO)
Dana Lehman (Managing Director) Brent Maddin (Provost)
Barbara Martinez (Chief External Officer) James Verrilli (Dean, Relay Newark)
Laura Lee McGovern (Chief of Staff) Robert Underwood (CTO)
Laura Maestas (Chief Talent Officer)
Tara Marlovits (COO Uncommon NYC)
Michael Ambriz (COO North Star Academy)
Overlapping Others with current/past significant presence on Relay web site [see, for example: http://www.relay.edu/programs/leverage‐leadership‐institute‐fellowship‐0/overview] [1] KIPP Co‐founder [2] Founder, Achievement First
Overlapping Staff/Officers
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Graduate School of Education
10 1737
60
103134
153
7189
132
172
231
280
330
$‐
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
0
50
100
150
200
250
300
350
400
450
500
2009 2010 2011 2012 2013 2014 2015
Total Tuition (if Full Paid)
Number of Teachers
Year
Hypothetical Tuition Revenue Generated by “New” (first two years) Teachers with Bachelors Degrees at North Star Academy
Novice Teachers (0 to 1 yrs) Total Teachers Full Annual Tuition x New Teachers7/6/2016 51
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Policy Issues/Concerns
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Concerns
• A substantial share of public expenditure intended for the delivery of direct educational services to children is being extracted inadvertently or intentionally for personal or business financial gain, creating substantial inefficiencies;
• Public assets are being unnecessarily transferred to private hands, at public expense, risking the future provision of “public” education;
• Charter school operators are growing highly endogenous, self‐serving private entities built on funds derived from lucrative management fees and rent extraction which further compromise the future provision of “public” education; and
• Current disclosure requirements make it unlikely that any related legal violations, ethical concerns, or merely bad policies and practices are not realized until clever investigative reporting, whistleblowers or litigation brings them to light.
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Efficiency Equity Quality of Life Persistent/ Sustained
Inputs /Processes
1. Duplicative management/ overhead
2. Student Sorting-Need
3. Student Sorting-Geography
4. Resource Allocation
5. Program delivery 6. Transportation
7. Student Sorting-Need/Race/ Ethnicity
8. Program delivery/ access
9. Resource Allocation [cost variation]
10. Discipline policies 11. Legal rights 12. Transportation
time/access
13. Transport time 14. Community
amenities & “Walkability”
Outcomes 1. Short-run (test score) performance
2. Long-term performance
3. Disciplinary action 4. Outcome disparity
Transitional 1. Facilities Use 2. Transportation 3. Capital Assets 4. Debt Management
5. Transportation 6. Capital Assets 7. Debt Management 8. Family/child
disruptions
9. Family/ child disruptions
Evaluation Checklist from forthcoming study
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Beyond comparing charter vs. district test scores
• Performance measures (such as assessment scores and gains) must be considered for the system as a whole, not for some small subset, and should be evaluated both in terms of equity and adequacy;
• Policymakers must evaluate cost and equity implications of student sorting by needs, and how resources, programs and services must be reallocated to ensure equitable access to adequate educational opportunities for all children;
• Systemwide decision making must consider management structures, service delivery and potential for inefficient duplication;
• Policymakers must consider seemingly mundane operations management issues such as logically, spatially distributing enrollments, optimally using facilities space, and optimizing transportation services/networks;
• Policymakers must consider quality of life factors such as transportation time, school/neighborhood walkability, and numbers of schooling disruptions faced by children and families;
• Policymakers must evaluate (and regulate) whether students’, taxpayer and employee rights are protected equitably, by evaluating (and managing) entrants to the market (based on their prior behavior and practices) and practices of those already operating in their space.