“Kids Seem to Be a Paycheck”: How a Billion-Dollar Corporation Exploits Washington’s Special Education System

by Lulu Ramadan, Mike Reicher and Taylor Blatchford, The Seattle Times

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Donna Green hit her breaking point last summer, six months into her job as the top administrator at the Northwest School of Innovative Learning.

She had grudgingly accepted when her request for classroom computers was ignored and a furniture order for what she called an “embarrassingly barren” campus was answered with plastic folding tables. She’d worried that her staff was inexperienced but had figured her decade in special education would help fill that void.

But then her corporate bosses told her to cut the hours of staff already struggling to serve high-needs children.

To Green, it meant that Northwest SOIL, Washington state’s largest publicly funded private school for children with disabilities, would fail to deliver on the promises it had made to school districts that send it more than 100 students and millions of dollars a year.

So she sat at her desk after classes let out for the day in August 2021 and typed up a resignation letter to the school’s owner, effective immediately.

“It is truly like living in the dark ages,” she wrote about the school, detailing its cost cutting at the expense of students. “I cannot ethically or morally be a part of this any longer.”

Northwest SOIL’s corporate owner, Universal Health Services, has for years skimped on staffing and basic resources while pressuring managers to enroll more students than the staff could handle, an investigation by The Seattle Times and ProPublica has found. The psychiatric hospital chain touted its first acquisition of special education schools in 2005 as a “comfortable fit” with its businesses, and Northwest SOIL staffers said they saw the profit motive drive day-to-day decisions.

School districts pay programs such as Northwest SOIL, called nonpublic agencies, to provide specialized instruction for students whose needs can’t be met in traditional public schools. But dozens of complaints filed with the state and school districts in recent years, along with interviews with 26 former administrators, teachers and assistants, show that Northwest SOIL received public money without providing the services or education that its students needed — or that taxpayers paid for.

Northwest SOIL collects about $68,000 in annual tuition per student — more than triple the average per-pupil cost for a K-12 student in Washington — while a student with the highest needs can bring the school as much as $115,000 a year, all paid for with taxpayer dollars.

Last week, The Times and ProPublica reported that the state’s failure to regulate this corner of Washington’s special education system had allowed the school to operate for years with little to no curriculum and with staff so poorly trained that they often resorted to restraining and isolating students.

UHS, which earned nearly $1 billion in profit last year, has long faced criticism that it squeezes patient care to maximize profit at its more than 400 hospitals and residential facilities nationwide.

While the company’s residential youth treatment centers have drawn national attention recently as federal regulators investigate abuse allegations, very little media or regulatory scrutiny has been directed at UHS’ special education day schools across the country. But The Times and ProPublica found that the company settled at least two lawsuits alleging it had provided insufficient staffing at schools in California or billed public agencies for services it didn’t provide, though the company didn’t admit wrongdoing in either case.

UHS is one player in a small but growing market of special education and disability services, as investors recognize the potential for profit from insurance, public education funding and other sources. A February report by a private equity watchdog group noted a flurry of recent corporate acquisitions of autism service providers. One national broker marketing the sale of a special-needs private school group touted it as a good investment and “extremely profitable.”

“There’s a lot of money at stake here,” said Kathleen Hulgin, a University of Cincinnati associate professor who studies the funding of private special education schools. Companies know they can depend on steady revenue with a “stable, publicly funded system.”

Northwest SOIL collected at least $38 million in tax dollars over the five school years ending in 2021. While all of its tuition comes from public sources, it’s unclear how much profit the school made, because it doesn’t have to report its spending to the state.

Fairfax Hospital, the UHS subsidiary that owns Northwest SOIL, defended the program in a statement to the Times and ProPublica, saying, “We strongly deny any allegation that we understaff and/or pressure staff to increase admissions in order to maximize profits.” UHS said it had no comment beyond Fairfax’s statement.

Fairfax also said it “strongly refutes claims regarding the intentional billing of services not provided” and rejected the claims in Green’s letter, calling it “a gross misrepresentation of our standards and the quality of educational services.” The school said it recently brought in new education materials and computers, and it added, “To say that the school didn’t offer the students a basic curriculum or textbooks is simply untrue.”

But Green said what she saw at Northwest SOIL went against what she had envisioned when she took the job.

Northwest SOIL — with three campuses in Tacoma, Redmond and Tumwater — relied on a bare-bones staff that earned far less than they could have at local school districts, Green said in an interview, making it difficult to recruit and retain qualified educators.

“There was no education whatsoever,” said Adriene Taulbee, a recreational therapist at Northwest SOIL’s Tacoma campus from 2019 to 2021. “It’s a moneymaking scheme for Fairfax, and the kids are the ones that are paying the price for this.”

Skimping on Staff

A 2009 Northwest SOIL yearbook shows the school once hewed more closely to Green’s vision of what a specialized school could do. It features photographs of classrooms staffed with one teacher and two assistants each, with class sizes no larger than 10. Smiling children pose in front of shelves brimming with books and walls decorated with posters and art.

Though Northwest SOIL has long struggled to keep staff and used restraint and isolation on students, at times it had more resources. In its early years, the school strived for a “full holistic approach, treating these kids as part of a family,” said Tamara Zundel, who launched the school in 2000 as its first director.

But after UHS bought Fairfax Hospital and Northwest SOIL in 2010 as part of its $3 billion acquisition of a psychiatric hospital chain, there was little special education training for staff and hardly any textbooks or supplies, according to interviews with former employees.

“They had one room with like some ratty textbooks, maybe three per subject,” said Ellen Grover, who taught at the Tacoma campus from 2016 to 2018. “That was just kind of the expectation — that you work with what we have, which is nothing.”

A Times analysis of Northwest SOIL’s staff lists from 2017 to 2022 found that the school’s three campuses — which serve students from kindergarten through high school — averaged only one certified special education teacher for every 18 students.

In contrast, Seattle Public Schools’ latest union contract requires higher staffing ratios for students with moderate to intensive needs: one special education teacher and three education assistants in every classroom with 10 elementary students or 13 secondary school students. (Maintaining these ratios was a flash point of the city’s teachers’strike in September.)

While some Northwest SOIL campuses had staffing ratios that at times approached Seattle’s standard, the Tacoma campus was a consistent outlier. The widest gap occurred in 2017 when the campus enrolled 106 students but had just two special education teachers, a Times and ProPublica review of state records found. In those records, Northwest SOIL listed four other people as special education teachers even though they lacked such a credential.

“You’d be surprised how much simple — I’m talking very basic — training on special education was lacking,” Green said in an interview. “If you don’t have the right staff, you cannot be promising that you can take in these children.”

Fairfax Hospital and Northwest SOIL said in a statement that it is not “meaningful” to compare the school to unionized public schools that serve different populations. Christopher West, who took over as CEO of the hospital in January, said that, under his tenure, the school made a push to hire more special education teachers. As of June, the school had 10 certified special education teachers serving 119 students.

A Times and ProPublica analysis also revealed that, at times, the school relied heavily on emergency substitute certifications — a category that allows people who don’t have teaching degrees to fill temporary gaps.

From 2017 to 2022, an average of one-fifth of the staffers at the Tacoma campus, the school’s largest, had emergency substitute certifications. Some staff worked under such certifications for as long as eight years. Others taught even after their certifications had expired, state records show.

These students “require highly specialized intervention, and unless you have people there and the resources, the chances are they are just being warehoused,” said Vanessa Tucker, a special education professor at Pacific Lutheran University near Tacoma.

Low pay contributed to a constant churn in staff and drew mostly underqualified candidates, former staffers said. Green said the school offered teachers with special education certification a starting salary of $45,000. Base pay for a first-year teacher in Tacoma schools is about $62,000, while special education teachers typically earn more.

At age 21, Kelly Nilsson had no education experience or credentials, but she was hired in 2017 as an educational assistant at Northwest SOIL’s Tacoma campus and assigned to a room with as many as 10 teenage boys with extreme behavioral challenges. After a few months, the class’s teacher left, and Nilsson was put in charge.

“They do not pay you well enough for what you’re doing,” said Nilsson, who said her starting wage was under $13 an hour.

Nilsson, who said she led the class for eight months before resigning in 2019, described multiple kids punching and breaking windows and staff frequently calling the police when children ran away from the campus.

“The kids aren’t bad,” she said, but the school, instead of helping them cope with their behaviors, often worsened their problems.

UHS denied staff requests for furniture and education material, former employees told The Times and ProPublica. Even school meals were paltry: typically cold hospital food shipped in from Fairfax, former staffers said.

“They can only get one of everything — one burnt microwaveable pizza and a milk and a bag of carrots — when this is a growing 13-year-old boy,” said Jami Visaya, a special education teacher who quit in 2018 after 18 months at Northwest SOIL’s Redmond campus. “Why couldn’t we get them healthier food?”

In its statement, the school said it strives to supply “proper nourishment and healthy meal choices.”

Dave Beling, a former director at the school, lauded employees who brought in more students while spending less money. In a 2016 employee review of a top administrator, Beling set a target of getting 50 students enrolled, according to Washington State Department of Health records. He also praised the administrator for “reducing cost” while “increasing student census by double.”

Beling, who worked at the school until 2020, did not respond to interview requests.

His LinkedIn profile describes one of his accomplishments at Northwest SOIL as overseeing “operational improvements which resulted in improved profit margins.”

“Kids Seem to Be a Paycheck”

Lynette Wilson’s son spent two years at Northwest SOIL’s Tacoma campus. Most days, she said, he surfed YouTube videos instead of learning.

At Northwest SOIL, he regressed, losing reading and communication skills. Wilson withdrew him from the school in 2021 after he returned home with bruises on his face, chest and back. She reported it to the police, but the investigation faltered when her son, who has severe autism, couldn’t say what had happened and the school couldn’t explain the injuries.

“It was like glorified babysitting,” Wilson said. “How do you not know what’s happening to your students?”

In a statement, Fairfax Hospital declined to answer specific questions about the incident, but emphasized that police investigated and found no wrongdoing.

Wilson’s son should have had a one-on-one aide, which was required in the contract between Northwest SOIL and his home district, but the school shuffled around staff to fill holes, she said. Northwest SOIL typically charges districts more than $3,000 a month per student for such aides in addition to more than $5,000 a month for tuition.

Several former employees said one-on-one aides often took on the role of classroom assistants for overwhelmed teachers, instead of acting as aides to a specific child.

It was a complaint Green raised in her resignation letter. “It felt unethical, honestly, like school districts were paying that money, but the company was prepared to ignore that,” Green said in an interview.

Fairfax Hospital denied leaving children without one-on-one aides but said such aides “do help out in the classroom.”

Green’s letter was one of thousands of pages of records about Northwest SOIL obtained by The Times and ProPublica through public records requests to seven state agencies and 45 school districts.

Parents and school district special education officials brought similar complaints to the state, asking for investigations or seeking advice on what to do.

In 2018, a parent of a fourth grader from Rochester, just south of Olympia, called state education officials begging for attention because her son was “not getting the help he needs or deserves” at Northwest SOIL’s Tumwater campus, state records show. The school was short-staffed, and the boy wasn’t learning much, the parent said.

“I feel like this is not being ran as a school but as a business,” the parent told Washington’s education department. “Kids seem to be a paycheck.”

A month later, Rochester’s special education director, Laura Staley, alerted state officials that Northwest SOIL had billed the district for services it hadn’t provided.

The school told the district it needed to pay an additional $3,000 a month for a one-on-one aide for a Rochester elementary school student, describing him as the “highest need” student in the program. Four months into the agreement, Staley asked how the aide was doing. The school acknowledged that it had only recently hired one.

Fairfax Hospital didn’t specifically respond to Rochester’s allegation but said “any discrepancies related to improper billing are unacceptable and are thoroughly investigated.”

Top special education officials from the state Office of the Superintendent of Public Instruction visited Northwest SOIL’s Tumwater campus in 2018 after a flurry of complaints, including the one from Rochester.

The state later notified Northwest SOIL that it was delaying renewal of the school’s annual application to accept students until its owners turned in a financial audit proving that “revenues provided by school districts are being used to provide the services” for students.

Scott Raub, the agency’s administrator for these private schools, told The Times and ProPublica the notification was merely a form letter to remind Northwest SOIL that it was required to provide an audit once every three years and did not indicate that the state intended to investigate the allegations.

UHS responded by sending a companywide annual report, which included a financial audit that outlined the multibillion-dollar corporation’s revenue and spending in all its facilities across the country. The 300-page report doesn’t mention Northwest SOIL.

Still, OSPI approved the school’s renewal, as it has every year since.

State Superintendent Chris Reykdal defended OSPI’s renewal of Northwest SOIL’s annual applications, saying in an interview that the agency’s role is limited by state law. The system puts the onus of responding to problems on the dozens of school districts that contract to send students to Northwest SOIL — even though they may not be aware of problems flagged by other districts.

A Push for Profits and Referrals

Before UHS acquired its first therapeutic day schools in 2005, the company — the largest operator of psychiatric hospitals in the country — had no previous experience operating this type of specialty school.

By expanding its behavioral health footprint into education, executives noted, the company would have opportunities to refer children “up the chain” to more acute settings like residential treatment centers or inpatient care.

“We think it’s an extremely comfortable fit with our existing businesses,” Steve Filton, the company’s chief financial officer, said in an earnings call that year.

Fairfax Hospital no longer has an adolescent inpatient unit, but Northwest SOIL said that, even when that unit was open, it rarely referred students to Fairfax. “To suggest that NWSOIL is in business to serve as a referral source for other behavioral health service lines is baseless and inaccurate,” the school said in a statement.

Before long, some of the same problems now happening in Washington surfaced at the company’s schools in California. UHS ran its California campuses with a “skeletal crew” of unqualified teachers and a minimum number of aides, former employees alleged in a lawsuit that they filed against UHS in 2008. Staff lacked proper training, they said, and relied heavily on restraints to control students. UHS denied it violated any laws and agreed to a $3.5 million settlement.

Former UHS employees in California and a past student filed a separate whistleblower lawsuit in 2009 on behalf of the state, accusing UHS of fraudulently billing education agencies. The company staffed classes with unqualified aides and falsified attendance records, the lawsuit alleged. UHS settled the case for $4.25 million without admitting wrongdoing.

“They were warehousing the kids and not providing sufficient education,” Michael Sorgen, an attorney for the plaintiffs, told The Sacramento Bee in 2010. “They make a lot of money by charging all this money for educational services. I think it’s a nationwide scam.” (Sorgen was unavailable for comment for this story.)

UHS shut down at least eight of its California schools as the whistleblower case proceeded and closed at least three others within a year of the settlement.

Unlike in Washington, California has extensive requirements for operating private schools that accept public school students with disabilities. California requires its schools to provide attendance records proving that students showed up on days outlined in billing statements. California also requires a teacher with special education credentials in every classroom and a specific ratio of students per teacher, typically 14-to-1.

Washington has no such requirements. The state calls for only one special education teacher per school and collects no data on attendance or academic progress at these private schools. And the state has afforded UHS wide latitude to run its program with little intervention.

When UHS lobbied to bring a similar system to Alaska in 2016, lawmakers balked.

UHS owns a psychiatric hospital in Anchorage called North Star Behavioral Health, which provides patients with access to education. The Anchorage School District employs the teachers.

Six years ago, UHS pushed for a bill that would have allowed North Star and other psychiatric facilities to build education programs and hire their own teachers, essentially taking that control — and significant taxpayer money — away from school districts. North Star argued that the bill would result in more academic instruction and improve students’ transitions back to traditional schools.

The arrangement would have given UHS access to a deep pool of state funding reserved for students with some of the most severe disabilities — as much as $80,000 a year per student, said Patrick Reinhart, the interim executive director of the Alaska Governor’s Council on Disabilities and Special Education.

The governor’s council was “pressured heavily” by North Star, Reinhart said, though the proposal faced pushback from disability rights advocates. The council initially supported the bill, Reinhart said, but soon “realized it was primarily a money grab.” The bill died in the Legislature, never advancing out of committee.

UHS declined to comment on the Alaska legislation.

In Washington, Reykdal, the state superintendent, said state lawmakers could step in and say to OSPI, “We want you to have more aggressive oversight over private providers.” He said, “That is a legitimate policy question.”

Green, the former director, thought the state already had the oversight power it needed. When she submitted the school’s application for renewal in 2021, staffing at the three campuses was thin. Even though the state requires only one special education teacher per school, Green found it troubling that her staff had only six certified special education teachers for 120 students. She thought the application would surely be flagged.

“I turned it in thinking ‘Oh boy, I’m going to get a call, someone is going to say something,’” she said. OSPI never commented on the staffing levels.

“I just really feel like there’s a major gap here,” Green said. “These are our neediest kids. I felt like there was no one looking out for them.”