There’s a lot of money at stake in Ohio charter schools, which as a group will receive almost $900 million in 2014. Charters get about $7,200 per student in taxpayer funding, compared to about $3,500 per student in traditional public schools.
On paper, Ohio’s charter schools are operated by non-profit organizations whose governing boards hire management companies to operate the schools. The boards are supposed to have a strong oversight role and have the power to fire charter operators if they don’t measure up.
It’s a particularly important role, given how poorly many charter schools perform. Since Ohio’s experiment in school privatization began, around 29 percent of the charter schools opened in the state have been closed, and according to Ohio Department of Education board member Mike Collins, the state has spent over $1.4 billion just since 2005 on charters that never scored above a D on their annual report cards.
Oversight is impossible without transparency. But when the governing boards at ten Ohio charters run by White Hat Management tried to find out how the company was spending its budget, the company simply refused to provide detailed records, claiming that information about how it was spending taxpayer money was proprietary.
The years-long legal struggle which is pending in the state Supreme Court relates to two questions at the heart of the school privatization controversy: When do public funds become private assets? And how much transparency do private companies owe when they provide public services on the public’s dime?
Oversight by a Hand-Picked Board
Ohio’s charter schools, which are publicly funded, are supposed to be subject to periodic state audits and held to performance standards by the sponsoring organizations that contract with operators.
But governing boards may not be as independent as they ought to be, as a 2014 investigation by the Akron Beacon Journal found. White Hat shares legal representation with the boards of many of the charter schools it has contracts with. And a number of board members have admitted that they were recruited by White Hat, a clear conflict of interest.
In a revealing statement, Maggie Ford, chief academic officer at White Hat, told the Beacon Journal, “Sometimes we have one or two people that would like to start a school, and they don’t have enough for an entire board. So they want to, they talk to, other board members or ask us to help recruit board, um, recommend board members.” In effect, the boards at many “nonprofit” charter schools were hand-picked by White Hat, which contracted with those same boards to operate the schools.
But the problems really started when board members at Hope Academies and Life Skills Centers started to examine White Hat’s operations. By 2010, board members at ten schools in Cleveland and Akron were concerned about whether resources were being used effectively at their schools, but the company had provided little information about its spending even to the boards of its schools.
As board member Lillie Blair explained to the Cleveland Plain Dealer, “The public says, ‘You’re responsible for the money we gave you – what did you do with it?’ And I as a board member have to say I don’t know.”
The boards had essentially agreed to pass over 95 percent of the schools’ budgets to White Hat, which then had sole responsibility for everything from hiring teachers to buying school supplies. In 2010, after White Hat refused to provide any additional details about its budgets, the ten school boards sued.
The lawsuit, Hope Academy Broadway Campus et al. v. White Hat Management, LLC et al., claims that White Hat didn’t meet its contractual obligations because it didn’t provide quarterly un-audited financial disclosures, it didn’t adequately track how various grants were spent, and it “failed to promote the academic success of each school’s students.”
When the boards that hired White Hat to manage their schools began demanding financial transparency, White Hat pushed back, insisting that it wasn’t required to provide full quarterly financial reports. When the Ohio House held a hearing about the complaints against White Hat in 2010, the company refused to testify.
(Read more at: PR Watch)