Saturday, October 24, 2015

Ohio Supreme Court sides with for-profit company over charter schools By Valerie Strauss

Consider this scenario: A for-profit company operating a charter school uses public funds — that means American taxpayer dollars — to buy computers, copiers, desks and other things for students and staff. The charter school decides to get a different management company. Who should get the computers, copiers and other machines purchased with public dollars? The schools or the for-profit company?
It if seems like a no-brainer to you, it wasn’t for the Ohio state Supreme Court. In a mixed-decision, it ruled on Tuesday in a lawsuit by 10 now-closed charter schools that the for-profit company that once operated them, White Hat Management, owns equipment it purchased for the schools with public funds. How did the court reach this decision?
White Hat is one of the largest for-profit charter school operators in Ohio and runs dozen of charter schools that have consistently received low grades from the state, which has a $1 billion charter sector that is as troubled as any in the country.
A June 2015 story in the Akron Beacon Journal about the newspaper’s review of 4,263 audits released last year by the state said that Ohio charter schools appear to have misspent public money “nearly four times more often than any other type of taxpayer-funded agency.” It says that “since 2001, state auditors have uncovered $27.3 million improperly spent by charter schools, many run by for-profit companies, enrolling thousands of children and producing academic results that rival the worst in the nation” — and the misspending could be much higher.
Efforts by Ohio’s lawmakers to require better oversight of charters have been unsuccessful.  On the same day as the ruling, members of the Ohio school board questioned Richard Ross, the state’s superintendent of instruction, about a charter school data scandal involving the state Education Department, according to NewsNet5.  Ross said he did not know that David Hansen, the department official responsible for school choice and charter schools, was giving help to charter schools to make them look better in state evaluations. Hansen resigned in July.

If all of this doesn’t underscore the need for change in the sector, it’s hard to see what would.
State Impact in Ohio, a project of NPR stations, calls the Akron-based White Hat “a charter school giant.” It says White Hat is owned by former manufacturing company chief executive David Brennan:
Brennan has played a major role in shaping Ohio education policy. He and his family members have donated millions to state legislators and governors over the past decade. And White Hat lobbyists have played significant roles in shaping Ohio’s charter school policies. White Hat handles the day-to-day operations of the Ohio charter schools it manages, doing everything from hiring teachers to ordering school supplies.
White Hat was sued by the governing boards of 10 of the dozens of schools it had managed. Each of the schools signed virtually the same contracts with White Hat in 2005. The schools received a total of more than $90 million in public money from 2007 to 2010, though only two performed at levels the state considered satisfactory during those years. According to the court decision:
Of the ten original schools, as of the 2010-2011 school year, two Hope Academies had been shut down by the Department of Education due to academic failure and three were on “academic watch”; one of the Life Skills Centers was on academic watch and second was on “academic emergency” (one step away from shut-down). This poor performance caused the schools to raise several issues, including how White Hat spent the money it received to operate the schools. Financial information revealed that White Hat spent money to purchase buildings ultimately owned by or renovated for the benefit of its own affiliates. According to the schools, although White Hat used part of the continuing fee to purchase personal property for use in the schools, it improperly titled that property in its own name.
The schools filed suit in 2010 after White Hat refused to provide further information on how it had used the public funds. The decision said:
The complaint sought declaratory and injunctive relief, an accounting, and damages for breach of contract and breach of fiduciary duty. As part of their allegations, the schools disputed White Hat’s claim of entitlement to all property White Hat purchased using public funds.
The schools said that White Hat had received nearly all of the public funding they had been given to operate and that the schools should have a right to what was purchased with the money.

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