Schools Move to Reclaim Taxpayer Dollars From Management Companies

In what may be a sign that charter school educators are exercising more scrutiny over the companies that operate their schools, two Pittsburgh charters decided this summer to end their management contracts and become independent, the Pittsburgh Post-Gazette reports.

Citing better capacity to operate on its own, the Environmental Charter School cut ties with Imagine Schools, one of the nation’s largest school-management companies, based in Arlington, Va. The PA Distance Learning Charter School, a virtual charter school, dropped White Management, an Akron, Ohio-based company, because “I knew very little about monies that were being spent and where they were being spent,” the school’s CEO James Hoover told the Post-Gazette.

It’s not been a great year for Imagine Schools and White Management, two of the largest charter school-management companies in the country.

Seven Missouri schools run by Imagine, which operates 70 schools nationwide, according to its website, were closed earlier this year due to poor academic performance. In Ohio, where White Hat is based, the department of education would not sponsor four new White Hat-operated schools; and a judge ruled against the company in a case involving financial reporting.

A regional director at Imagine Schools told the Post-Gazette that the parting with Environmental Charter School was mutual, and the school’s CEO, Jon McCann, said the Missouri controversy did not influence the decision. In 2009-10, according to the newspaper, the school paid Imagine $547,766 in management fees, including for curriculum, and $542,946 to lease a school building from an Imagine subsidiary.

Based on Hoover’s comments, the questions around White Hat’s finances likely contributed his school’s decision to go it alone. The school paid $2.47 million to White Hat in 2009-10, more than half the school’s expenditures, the Post-Gazette reports, and was required to hand over nearly all of its revenue. Hoover said the school was asked to buy office furniture and student computers back from White Hat, even though taxpayer dollars funded the equipment in the first place.

White Hat didn’t respond to the Post-Gazette‘s requests for comment (it rarely does), but it appears to be losing contracts. In March, the company managed 41 schools in five states. Its website now lists 33 schools in three states.

The moves are among a growing number of developments suggesting that education agencies are becoming more diligent about where per-pupil taxpayer funding is going, especially as school choice diversifies the potential destinations.

I’ve reported on the battle between Gary, Ind., and EdisonLearning over a single high school after the state took the school over and awarded the management contract to the New York City-based company. Gary sent out robocalls advertising its district-run schools in opposition of the city’s charters.

This week, the Associated Press reported that school districts throughout Indiana are increasing marketing efforts to persuade students to attend public schools rather than enter into the state’s new private school voucher program. One district claims it has had to cut a number of teaching positions because of the departing students.

Districts have dealt with these types of issues as long as they have co-existed with charter schools (Gary’s marketing campaigns date back to 2003), but Michael McShane, a research fellow in education policy studies with the American Enterprise Institute, says that efforts to counter school-choice and -privatization options are reaching new heights.

“This is uncharted territory for many of these system leaders, as most schools and districts have been well insulated from competitive pressures,” he wrote in a recent blog post.

In Missouri, the closure of several charters—including of the Imagine schools, which displaced 3,500 students—has been a boon for urban school districts. Enrollment is up 6 percent, to 20,029 students, in St. Louis, and up a projected 15 percent in Kansas City, to 18,200 students, the AP reports. As part of its own campaign to entice students, St. Louis opened three new schools just for the displaced Imagine students and hired much of the schools’ staff, the AP reports.

Both of those districts still have big problems. St. Louis and Kansas City have lost their accreditation because of poor academic performance, and there is pending litigation that would allow students to freely transfer out of the districts. But as many LEAs are seeing, with every student comes a dollar amount, and in difficult times, every dollar counts.

10 thoughts on “Schools Move to Reclaim Taxpayer Dollars From Management Companies

  1. Jason, have you seen this CNBC clip of David Brain, president and CEO of Entertainment Properties Trust, explaining how their Imagine Schools’ profits aren’t affected by these little bumps. He says charter schools are a $2.5 billion investment opportunity, and are recession proof because they have a political lock on public money.

    Aaron Regunburg at Rhode Island Futures found that gem. Here’s his comment, "Corporate Agenda Behind Public Charter Schools":

    The corporate agenda behind these ripoffs is the same corporate agenda that’s behind Edweek, so congratulations are in order to Edweek on its decade of hard work unleasing predatory scum like this on America’s children.

  2. Be polite and respectful all the time. That means “please” and “thank you,” of course. Also follow class rules such as listening when another student is talking, taking turns, or raising a hand instead of shouting out.

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