Solution: Eliminate the middle man. Keep all of the rent! Open a virtual school. (It works, see K-12, Ohio Connections or ECOT)
Columbus Dispatch is getting on board.
$1 million judgment against charter school operator
The Columbus Dispatch - January 21, 2015 01:00 PM
A federal judge in Missouri ordered Imagine Schools, one of the nation’s largest charter-school operators, to pay nearly $1 million for forcing a lucrative lease agreement on a school it operated.
Under the complex deal, Imagine Schools negotiated the pricey lease with SchoolHouse Finance and presented it to the school board of the Renaissance Academy for Math and Science for approval. Imagine Schools owns SchoolHouse Finance and directly benefited by the agreement.
“This clearly constituted self-dealing,” U.S. District Judge Judge Nanette K. Laughrey wrote in a blistering 29-page ruling.
Sound familiar? The Dispatch in October reported about a North Side charter school spending more than half of the tax dollars it receives on rent in a very similar lease deal with Imagine Schools and SchoolHouse Finance. The board of the Imagine Columbus Primary Academy asked Imagine to renegotiate the lease but that has not happened.
Other Ohio charter-school operators use similar lease deals, and while apparently legal, supporters and opponents complained that they wasted tax dollars and lawmakers pledged to take a look.
"Legislators who are working on charter school reforms should make prevention of these types of abuses a top priority," said ProgressOhio Executive Director Sandy Theis.
Charter schools are privately operated with public tax dollars and many contract with management companies to handle day-to-day operations.
ProgressOhio recommended placing a cap on state money used for rent, requiring the Ohio Board of Education to sign-off on leases, requring charter-school boards to have independent attorneys and financial officers and other changes.
In the Missouri case, the school board of the now-closed Kansas City school sued its former management company, claiming it had manipulated the board and failed to act in the school’s best interest. “While the Renaissance Board theoretically had authority to act independently on some limited issues, it was in fact a captive of Imagine Schools by both design and by operation,” Laughrey wrote. “While this changed over time with the assistance of the sponsor, the University of Missouri, intervention came too late to save the school, which operated consistently with too few expenditures for instruction and low student performance.”
Laughrey found no evidence that Imagine Schools discussed the market rate for similar leases with the Renaissance board or informed members that SchoolHouse calculated the rental rate based on a 12 percent return on investment regardless of the market rate. They also neglected to mention that the higher-than average rent would result in lower-than average expenditures on books, supplies and teacher salaries.
“For example, in 2007-2008, Renaissance spent 27.9 percent of its funds on instructional costs while the national average was 65.8 percent and Missouri was 64.6 percent,” the judge noted.
Laughrey also had some interesting findings about how Imagine gets board members to go along with these not-so-sweet deals. Imagine recruited inexperienced school board members and one who had received political contributions from the companies and had family members working there.
Under the complex deal, Imagine Schools negotiated the pricey lease with SchoolHouse Finance and presented it to the school board of the Renaissance Academy for Math and Science for approval. Imagine Schools owns SchoolHouse Finance and directly benefited by the agreement.
“This clearly constituted self-dealing,” U.S. District Judge Judge Nanette K. Laughrey wrote in a blistering 29-page ruling.
Sound familiar? The Dispatch in October reported about a North Side charter school spending more than half of the tax dollars it receives on rent in a very similar lease deal with Imagine Schools and SchoolHouse Finance. The board of the Imagine Columbus Primary Academy asked Imagine to renegotiate the lease but that has not happened.
Other Ohio charter-school operators use similar lease deals, and while apparently legal, supporters and opponents complained that they wasted tax dollars and lawmakers pledged to take a look.
"Legislators who are working on charter school reforms should make prevention of these types of abuses a top priority," said ProgressOhio Executive Director Sandy Theis.
Charter schools are privately operated with public tax dollars and many contract with management companies to handle day-to-day operations.
ProgressOhio recommended placing a cap on state money used for rent, requiring the Ohio Board of Education to sign-off on leases, requring charter-school boards to have independent attorneys and financial officers and other changes.
In the Missouri case, the school board of the now-closed Kansas City school sued its former management company, claiming it had manipulated the board and failed to act in the school’s best interest. “While the Renaissance Board theoretically had authority to act independently on some limited issues, it was in fact a captive of Imagine Schools by both design and by operation,” Laughrey wrote. “While this changed over time with the assistance of the sponsor, the University of Missouri, intervention came too late to save the school, which operated consistently with too few expenditures for instruction and low student performance.”
Laughrey found no evidence that Imagine Schools discussed the market rate for similar leases with the Renaissance board or informed members that SchoolHouse calculated the rental rate based on a 12 percent return on investment regardless of the market rate. They also neglected to mention that the higher-than average rent would result in lower-than average expenditures on books, supplies and teacher salaries.
“For example, in 2007-2008, Renaissance spent 27.9 percent of its funds on instructional costs while the national average was 65.8 percent and Missouri was 64.6 percent,” the judge noted.
Laughrey also had some interesting findings about how Imagine gets board members to go along with these not-so-sweet deals. Imagine recruited inexperienced school board members and one who had received political contributions from the companies and had family members working there.
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