The Ohio Department of Education (ODE) has come out with some strong words for one of Ohio’s charter school management organizations that has the audacity to turn a profit — a practice that has existed since the for-profit charter school process was enacted in Ohio many years ago.

The management company believes it is entitled to redirect the $700,000 profit into the company’s other operations, in the same way that other for-profit companies such as White Hat Management and Altair Learning Management (ECOT) have been doing without state intervention.

But ODE disagrees:

That money is supposed to benefit the at-risk kids at [the charter], an online high school… Since 2010, the Ohio Department of Education repeatedly has told [the management company] to stop taking the money and to start letting the online high school make its own decisions.

Now, the state is trying to decide how to make sure the charter-school students receive the money meant to fund their education.

“We’re going to keep pushing this until, hopefully, we get a resolution,” said Joni Hoffman, director of the state’s office of community schools.

[Columbus Dispatch, 1/15/2012]

This is a rather confusing situation, of course.  I was unaware that charter school management companies weren’t supposed to be turning a profit.  In fact, I thought that premise has been a key facet of the argument against charter schools since their inception — they are redirecting public money to private entities.  That’s not much of a secret, is it?

During the recent coverage of a lawsuit by some charter schools against White Hat Management in an effort to get the company to open its financial records, a letter by White Hat CEO David Brennan was released to the public.  In the letter, Brennan makes it clear that he is trying to run a profitable business and, upon releasing the figures, they must honestly reveal their profits.

Clearly we have a problem in that we have not met a forecast for the bank in the last 5 years. PNC does not trust our numbers because of this failure. We must increase our enrollments and show profitability.  To meet the required payments on our loan, we must show an excess of 2 million every year for the next 5, while still covering our on-going necessary capital and operating needs.

Much as we would rather not, we need to sound a cautionary note. When both financial and test result stresses are high, there may be a temptation to ‘fudge the numbers.’ This must not happen. It would be contrary to everything we are fighting for. It would give credence to all the lies that our opponents tell about us.

In the first paragraph, Brennan implies that the profits for White Hat are on the decline and that the profits must be at least 2 million per year in the 5-year forecast.  But is ODE troubled by this blatant admission of profits? If so, they are keeping it a secret.  The only involvement by ODE is to support the jurisdiction of Franklin County Common Pleas Court Judge John Bender in the charter schools’ lawsuit against White Hat, but nothing about the profit.

David Brennan is also a fan of the legislature, gaining access this year to rewrite much of Ohio’s charter school rules through the state budget — hardly an indication that anyone is troubled by the profitability of this company by revenue from taxpayer dollars.  I suppose the fact that David Brennan and his immediate family members gave $431,721 to Ohio Republican politicians in the last election cycle doesn’t hurt, either.

But back to the management company that is incurring the wrath of ODE.  They haven’t been tithing to the GOP, so they’re being punished.  The worst part of the whole situation is that they have had the gall to direct the profits toward the education of other public school students!!

That’s right the London City School District is the target of ODE.  London is the sponsor/management agency for the London Digital Academy, an online high school.  According to London, the profit is theirs to disperse as they see fit.

The treasurer for both the charter school and the district, Kristine Blind, said officials plan to continue the “revenue sharing” method. The London district’s lawyer, Susan B. Greenberger, said it’s really not that unusual. The school was started by the district and by definition must be overseen by it.

The best part about the Dispatch article is the litany of quotes that document the indignation (and hypocrisy) of those mad that the public school district is profiting:

Now, the state is trying to decide how to make sure the charter-school students receive the money meant to fund their education.

Right, as opposed to the private companies running charters that are specifically called “for-profit.”  Perhaps if London City wasn’t trying to reinvest the money in the education of their children…

In one of its letters to the district, state officials said London “seems to be operating as though the community school exists solely to increase revenues to the district.”

Replace “district” with for-profit management company and there is no investigation by ODE, no newspaper story.

Some former members of the charter school’s governing board and a former London Academy principal say the charter-school students are being cheated.  “It’s a very sad situation. The bottom line is, kids aren’t getting served,” said Pete Bartkowiak, whose job as Academy principal was eliminated in December 2010.

This one is shocking.  Ohio charter school students being cheated – not getting served?  Who knew?  If only we had a state ranking system that would provide us some measures that would expose poor-performing charters schools.  Damn – if only!!!

Because London Academy is an online school, it has lower costs than a brick-and-mortar school might. That’s why it makes a profit.

Time out.  Read that sentence back slowly.  Online schools have lower costs and that’s why they make a profit.  So, the school has lower costs, resulting in a profit, but ODE is claiming that London should be spending all of the revenue on the school.  Right.  So if online schools have lower costs, resulting in a profit, why is Ohio continuing to fund more and more online schools every year, including 2 that rank in the top 20 districts in the state?  It couldn’t have anything to do with Kasich’s good pal William Lager’s ECOT being the largest, could it?

The Education Department might have left the situation alone if London Academy was a high-performing school, Hoffman said. But it has an F grade. Officials wonder if the school would have improved if more money was going directly to it.

Do you think ODE officials also wonder:

  • if ECOT’s graduation rate would be higher than 41% if CEO William Lager cut back on business profits?
  • if White Hat management schools would have a higher average graduation rate than 12% if he wasn’t focused on earning $2 million in annual profits?
  • if the other 70 charter schools assigned “F” grades by ODE would have improved if they weren’t operated by for-profit companies?
  • if Ohio’s PUBLIC schools would improve if more was going directly to them?

This episode still has me shaking my head.  We have hundreds of charter schools in Ohio being operated by private companies receiving revenue from the state with the clearly stated intent of turning a profit for the owners.  And yet, as this article clearly indicates, the Ohio Department of Education is arguing that the London City School district should not be afforded the same option, despite the fact that they are taking the “profit” and reinvesting it into the public education system.

Maybe if the London superintendent and treasurer were donating some of the profits to our elected officials this would be a non-story.


Seriously – Officials wonder if the school would have improved if more money was going directly to it.