Forum Post: Indiana Charter School Problems

The following four articles are from 2009 and they are part of a series. EDUCATION INC. – Part I: Private company skirts public boards in running tax-funded charter schools For-profit makes decisions for tax-funded Imagine

Dan Stockman and Kelly Soderlund | The Journal Gazette FORT WAYNE, Ind. – The local school board was about to spend almost $100,000 of taxpayer money on a busing service for students.

But there was no discussion of bids to ensure taxpayers got the best deal. There were no questions about cost, insurance or alternatives to this contract awarded to a southern Indiana trucking company.

Most importantly, there was no vote.

Despite spending millions of tax dollars a year, the board of this public school votes on almost nothing.

Not the $87,510 a year to operate school buses. Not $114,871 to run a lunch program. Not which teachers are hired or whether to hold summer school, or even whether to borrow more than $1 million for operations.

All those decisions and many more were made by a private company from Virginia, though Internal Revenue Service regulations say tax-exempt organizations such as this one must have independent, local control.

Welcome to Imagine charter schools.

When Imagine board members do make major decisions, they often do so by signing papers outside of public meetings, with no public debate and no public vote. Instead of local control, a Journal Gazette investigation found, executives with the for-profit management company tell the Fort Wayne board members how decisions will be made and how money will be spent.

magine Schools Inc., a for-profit company in Arlington, Va., makes nearly every important decision in Fort Wayne and has even used the local agency’s non-profit status to expand its charter school empire of 73 schools in 12 states.

“Ultimately, for all charities, the board of directors should be the entity that has full oversight and control over the organization,” said Bennett Weiner, chief operating officer of the BBB Wise Giving Alliance, a national charity-monitoring organization based in Virginia. “The staff reports to the board of directors, not the other way around.”

That might be news to board members, the IRS, state regulators and the Hoosiers whose tax dollars pay for those schools. For the 2007-08 school year, Imagine MASTer Academy received $2.9 million in taxes, plus a $1.24 million low-interest loan from the state. http://www.journalgazette.net/article/20091101/LOCAL10/311019878/1216/LOCAL1006

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The president of Imagine Schools Inc. sent his employees a memo last fall outlining how he thinks his schools should operate.

In Dennis Bakke's opinion, it shouldn't be local people making decisions about how local tax dollars should be spent; it should be the Imagine executives employed by the for-profit educational management company based in Arlington, Va.

"In none of these cases did the board have a major role in 'starting' the school. They didn't write the charter. They didn't finance the start up of the school or the building. They didn't find the principal or any of the teachers and staff. They didn't design the curriculum. In some cases, they did help recruit students," Bakke wrote. "I do not mind them being grateful to us for starting the school (our school, not theirs), but the gratitude and the humility that goes with it, needs to extend to the operation of the school." Bakke's memo details his ideas for keeping boards under control – make members feel wanted by approaching them not for decisions, but for advice.

"The best way to acknowledge your need for a board member is to keep them informed of what is happening and ask them their advice on ALL significant decisions before the school, including hiring and firing decisions," Bakke wrote. "I believe that most of the problems we have with boards are caused not from taking decision making away from them, but not involving them in the advice process."

And when board members do become a problem by thinking they are in charge, Bakke has an easy answer: Get rid of them.

"Sometimes you can protect yourself from board members that you chose, by getting undated letters of resignation from the start that can be acted on by us at any time would also help," Bakke wrote. "Some states allow 'founding' boards that can be changed once the school starts. That is a good idea if we can control who stays and who goes."

Controlling who stays and who goes is exactly the technique Imagine Schools used to rein in a board for a proposed school in Texas that was asking too many questions about Imagine's contract and Imagine's decision-making power. http://www.journalgazette.net/article/20091102/LOCAL10/311029969/1216/LOCAL1006

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FORT WAYNE, Ind. – On Feb. 8, 2008, a curious thing happened.

According to Texas Secretary of State records, Imagine Schools of Central Texas Non-Profit LLC of Georgetown, Texas, was established. That in itself was no surprise, because Imagine charter schools have been popping up all over the country.

What was curious was who owns the corporation and its twin, Imagine Schools of North Texas Non-Profit LLC of McKinney, Texas. The sole member of both limited-liability companies is Imagine-Fort Wayne Charter Schools Inc.

And the Texas entities get their tax-exempt status because each is a wholly owned subsidiary of the Fort Wayne company.

Imagine-Fort Wayne Charter Schools Inc. is the non-profit corporation that runs Imagine MASTer Academy, a charter school at 2000 N. Wells St. in Fort Wayne. Imagine MASTer Academy is a public school whose $2.9 million cost to operate last year was paid for with state taxes.

So why does a Fort Wayne charter school own two charter school corporations in Texas? http://www.journalgazette.net/article/20091103/LOCAL10/311039976/1216/LOCAL1006

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Part IV http://www.journalgazette.net/article/20091101/LOCAL10/311019871/1216/LOCAL1006

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Policymakers pushing charter school expansion ask taxpayers to overlook the business side of the equation, using children and school choice as a distraction from deals that benefit investors at the expense of classroom spending. Allen County tax officials have done Indiana taxpayers a favor in prying open the Imagine real estate playbook. Legislators would be wise to slow their rush to pass a charter bill until ensuring there are safeguards to keep Indiana tax dollars in Indiana schools.

The tangle of leases and subleases, for-profit management organizations, charter school boards and real estate investors involved in some of the state’s existing charter schools begs for transparency before more tax dollars start flowing out of state.

Statewide, a lot of money is spent. Taxpayers will spend more than $3.2 million in rent this year on just four Indiana charter schools. Most of the dollars are flowing to a Kansas City, Mo., real estate company that earned $84.7 million in profits last year. And while the Allen County board is scrutinizing the property tax exemption sought for the company’s property on North Wells Street, Entertainment Properties Trust can’t lose: Its triple net lease agreement makes the tenant – Indiana taxpayers – responsible for maintenance costs, utilities, insurance and taxes. http://www.journalgazette.net/article/20110417/EDIT/304179965/1147/EDIT07

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And a brilliant piece on their great success Indiana charter schools fail to succeed http://dailycensored.com/2011/01/18/indiana-charter-schools-fail-to-succeed/

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Hey, tax payers you are getting ripped off.