An August 2012 story in the South Bend Tribune reported that Florida-based Charter Schools USA was predicting that they’d lose money in the deal to take over three Indianapolis public schools,
INDIANAPOLIS (AP) — A company hired by the state to take over three Indianapolis public schools says it could lose money in the deal in the first two years even though its contracts don’t set minimums for classroom spending.
Similar contracts cover private operators now running a Gary high school and another Indianapolis school in the first state takeovers of schools that struggled for years with low student test scores, The Indianapolis Star reported Monday.
The state contracts pay each of the operators a set amount per pupil, which will come to more than $30 million per year for the five schools.
Florida-based Charter Schools USA has faced higher-than-expected startup costs and lower enrollment at the Indianapolis schools it is taking over — Howe and Manual high schools and Emma Donnan Middle School, company president Jon Hage said.
“The honest truth is we will probably lose money in these schools the first two years,” Hage said. “If the schools do well academically, they will grow enrollment.”
In my August post on the matter, I pointed out the headline stated the Charter Schools USA “had no profit limits,” but no classroom spending limits either. So poor Charter Schools USA’s boss Jonathan Hage was going to operate those Indianapolis schools at a loss. One month later, Hage’s development arm Red Apple Development LLC slipped $5000 into the campaign coffers of then Indiana superintendent of public education Tony Bennett.
Fast forward to December 2012. Bennett has been ousted by the voters of Indiana when a court ruling came down that those Charter Schools USA facilities in Indianapolis which were supposed to be operating at a loss were getting $6 million more of Indiana taxpayer money than the were supposed to. From Indiana Public News reporter Dan Goldblatt:
A Marion County judge has decided that the Indiana State Board of Education misappropriated several million dollars of funding to charter schools. The money was being withheld from Indianapolis Public Schools.
When private companies took over four Indianapolis Public Schools to become charters, the State Board of Education counted the number of kids enrolled in the takeover schools during the 2011-2012 academic year, the last year IPS was in charge.
When the charter schools took over this year, enrollment in those four schools dropped by almost 50-percent. However, according to a statement from IPS, the state gave the charter schools funding based on the previous year’s enrollment.
Furthermore, IPS charged, the money tied to the kids who transferred from a takeover school back to IPS did not follow the child; it stayed with the charter school.
A judge this week decided the state should have looked at this year’s enrollment when distributing funding to the schools, and ruled that more than $6 million must be returned to IPS.
Three of the four schools taken over are now operated by Charter Schools USA. Spokesperson Colleen Reynolds says while she doesn’t know if or how the state will recoup the money, it does not plan to change its model.
“We are going to provide the educational services and the caring environment that we’ve established so far,” she says. “We’re going to continue what we’ve been doing.”
The Department of Education says it is currently reviewing the ruling to determine next steps.
Bennett is still wrapping things up in Indiana, but when he arrives in Florida later this month he will find his benefactor Charter Schools USA and it’s well-connected CEO Hage firmly entrenched. According to this morning’s Palm Beach Post story, Hage’s company put $214,500 into Florida campaigns last fall.
Bennett will have the opportunity to help Hage and Charter Schools USA again. Two Florida school boards have said no to Hage’s applications in Orange and Seminole counties and were overruled by the state Charter School Appeals Commission where he will have a seat.
The “misappropriated” money for Charter Schools USA in Indianapolis came on Bennett’s watch. It may turn out to be an understandable mistake due to policy formulas. New education superintendent Glenda Ritz will be sure to investigate. At any rate, the episode represents another conflict of interest for Bennett. Florida’s new education commissioner will need to recuse himself in the event an appeal from Charter Schools USA comes before the appeal’s board. But this doesn’t address the charter school oversight departments at the FLDOE he will oversee.