Bill Lager, David Brennan, and Ron Packard: Swindlers Stealing Tax Dollars from Ohio Public Schools

While the Ohio Department of Education and the Ohio Supreme Court have finally ended the career of William Lager, the founder of Ohio’s huge, notorious online Electronic Classroom of Tomorrow, Ohio’s legislature has never passed adequate laws to protect taxpayers and students from unscrupulous swindlers operating charter schools.  Besides Bill Lager, another notorious charter school czar has disappeared from the scene this year.  David Brennan, founder of White Hat Management, a huge and shady for-profit Education Management Organization (EMO), has sold off all of his Ohio schools.  But it seems sales of Brennan’s Ohio schools are expanding Ron Packard’s EMO—the for-profit Accel Schools. Packard founded and, until 2014, served as CEO of K12 Inc., the nation’s biggest operator of for-profit, online charter schools.

From the very beginning, Ohio’s biggest charter schools have been run by con men. They paid off  legislators to allow them to cheat the public at the expense of the public schools. This story traces all the way back to 1991, and it is helpful to be reminded of the history. David Brennan, father of Ohio school privatization, was first and foremost a business entrepreneur, reports the Akron Beacon Journal‘s Doug Livingston: “Brennan made millions buying and selling manufacturing companies in Akron.  In the 1990s, he promised to unleash the private market on what he demonized as failing government schools. His tactics included $1 million in political contributions to elected GOP officials… Then Gov. George Voinovich put Brennan in charge of crafting Ohio’s private voucher program, which would eventually bring Brennan’s private schools more state funding per pupil than was flowing to 85 percent of Ohio’s traditional public schools.”

But when Brennan realized that operating charter schools would be far more profitable—under what had become, through the lobbying maneuvers of Brennan and his friends, extremely lax oversight laws—Brennan immediately switched his empire’s mission and became a charter school operator. Livingston continues: “The Akron Beacon Journal reported that flipping the switch from private to charter school on just one White Hat operation in Akron would generate $285,000 more a year for a mere 75 students. The school, reconstituted to get around a state law that banned converting private schools to charter schools,… was called Hope University Campus.  It would be the first of dozens of K-8 schools bearing the Hope Academy moniker. Brennan’s charter schools, ranking among the lowest performers in the state, were plagued from the start with allegations of padded enrollment and skirting accountability. Amid the bad publicity, White Hat lobbyists pushed for exemptions… In 2010, fed up with not knowing how White Hat was spending 97 percent of the tax dollars sent to each academically failing school, 10 (of Brennan’s White Hat) school boards sued the operator.  White Hat fought them to keep ownership of all the desks, computers, and assets bought over the years with public money.”

Livingston explains that White Hat’s Hope Academy (K-8) schools and his Life Skills Academy dropout recovery high schools, among the worst-rated in the state, have been losing ground as charters have expanded across Ohio. Now Brennan has closed or sold off the last of White Hat Management Company’s Ohio charter schools: “By June of this year, White Hat’s once prolific presence in Ohio had shriveled to a single online school—Ohio Distance and Electronic Learning Academy (OHDELA)—and 10 ‘Life Skills’ centers, which deliver computer-based GED courses to academically faltering teens and young adults.”  Over the summer, the Life Skills Academies have either been sold to other operators or shut down.

Now that swindlers, Bill Lager and David Brennan, have left the Ohio charter school scene, one wishes Ohioans could be reassured that unscrupulous online schools and shady dropout recovery academies are gone for good.  But Ron Packard, a former banker, knows a lucrative opportunity when he sees one. The Plain Dealer‘s Patrick O’Donnell reports: “The once-mighty White Hat charter school empire continues being dismantled, with its longtime e-school—the Ohio Distance Learning Academy (OHDELA)—being turned over to the fast-growing Accel charter school network. The move puts Accel founder Ron Packard, the founder and former CEO of the giant national e-school company K12 Inc., back in the online education business after four years away… As White Hat’s presence shrinks, Packard’s is growing incredibly quickly. After resigning as K12 CEO in early 2014, Packard has been taking over operations of charter schools across Ohio, usually by negotiating to assume management of financially-struggling schools. He snagged several strong schools from the Mosaica network first, then more than a dozen low-performing White Hat schools. When Cleveland’s I Can charter network had financial trouble in early 2017, he took over those schools. And earlier this year, he added several more previously run by Cambridge Education Group, a company with White Hat ties.  Even before the OHDELA transfer, Packard and Accel were running 37 charter schools across Ohio with about 10,700– students…. OHDELA adds another 1,100 students.  Accel is also starting new schools this fall in Cincinnati, Dayton, and Lorain. That combined enrollment makes Accel bigger than all but 13 school districts in Ohio…”

In a follow-up report, O’Donnell explains that Packard claims to have learned from the problems of K12 Inc. online schools. Packard says he plans to require more in-person meetings between students at OHDELA to keep online students engaged, to reduce the kind of advertising that pushed enrollment growth at K12 over academic priorities, and to make a a greater effort to engage students who are not self-motivated.  However, as O’Donnell interviews Packard, it is clear that while Packard admits there were failings at K12 Inc., the corrections in his Accel network will be limited. Packard tells O’Donnell: “The overwhelming majority of kids were coming in way behind grade level… and they didn’t have support of households. The model needed to change to reflect that.” But O’Donnell continues, paraphrasing Packard: “Those students, he said, need far more help from the school. That’s why to have students meet with staff more often. It won’t be at the level of ‘blended’ schools, which have students take lessons in person a couple days a week, while working online other days. He envisions monthly visits or having students come to a school for tutoring and to take ongoing tests of their progress.”

As his for-profit Accel management company takes over the Ohio Distance and Electronic Learning Academy, I guess Packard expects to provide students with at least a bit more personal attention.

I hope the recent explosion of Ohio’s ECOT scandal will motivate Ohio’s legislators to enact more than just a bit of added oversight to try to reign in swindlers who continue to figure out ways to suck tax dollars out of state coffers and the budgets of Ohio’s more than 600 local public school districts.

Another Chapter in the Saga of Ohio’s Electronic Classroom of Tomorrow

The Columbus Dispatch reminds us where we are in the story of ECOT, Ohio’s online charter school, the Electronic Classroom of Tomorrow. Currently the Ohio Supreme Court is considering ECOT’s “lawsuit fighting the state’s requirement that the online charter school repay $60 million for unverified enrollment for the 2015-16 school year. The state says the school owes another $19 million for the same reason in 2016-17.”

In an editorial last Friday, the Dispatch describes what seems to be the unraveling of the scam William Lager has been running for years with the support of Ohio legislators to whom Lager has generously contributed: “Overall, it has been a trying year for ECOT.  What was for years a smoothly operating business plan—signing up students in droves and billing taxpayers for their education, regardless of whether the students actually logged in to get one—was interrupted by state officials demanding accountability for all that money. Instead of taking the school’s word on attendance, the Department of Education demanded to see ECOT log-in records.  That led to a finding that ECOT had overbilled taxpayers by 143 percent, and an order to repay $60 million for the 2015-16 school year.  That was just for starters; the department is auditing ECOT for other school years. In September, it said the school owes another $19 million in overpayments, for the 2016-17 school year.  As ECOT is laying off employees and slashing its budget to cope with the clawback, Yost (Dave Yost, Ohio’s state auditor) has said that a proportional share of the repayment should come from the for-profit companies, owned by ECOT founder Bill Lager, with which ECOT contracts for services.”

It appears that ECOT officials launched a new strategy last week: blame ECOT’s attendance officer, who had complained all along that the school was not providing the adequate computer software for him to do his job. The Dispatch reports that, as of last Friday, ECOT’s truancy administrator, Patrick Tingler, has resigned. Tingler had testified last year in a deposition that ECOT’s software left him unable to add up the total number of days students were absent without an excuse. He had complained that he had to compute such records manually. The Dispatch adds: “Tingler’s truancy software did track consecutive days students missed, but ECOT crafted a more-relaxed truancy rule for itself than the one called for in the Ohio Revised Code. Instead of missing five or seven consecutive days to be considered truant, ECOT used 30 days, Tingler testified. This truancy measure appears nowhere in state law… After students log in, Tingler testified, he didn’t track whether they participated in any classwork, which is at the heart of the state funding lawsuit.”

ECOT’s other recently exposed strategy has been to rally powerful friends and endorsers behind its lawsuit challenging the Ohio Department of Education’s effort to claw back overpayments to the school.  Steve Dyer of Innovation Ohio reports that five former Republican state legislators filed an amicus brief supporting ECOT’s lawsuit. Together the five “have received more than $50,000 in campaign contributions from Electronic Classroom of Tomorrow founder William Lager, and nearly $135,000 total from Lager and David Brennan—Ohio’s charter school Godfather.”

The Columbus Dispatch explains that William Batchelder is among the five: “William G. Batchelder is described in the brief as the former House speaker, and a former common pleas and appeals court judge. It does not mention that, until late July, his lobbying firm, The Batchelder Company, represented ECOT founder Bill Lager.”

Steve Dyer adds: “In fact, the lead legislator on the filing is William Batchelder—one of the longest serving state legislators in history, who was Brennan’s bag man on Ohio’s school voucher legislation in the mid-1990s. Batchelder left the legislature in 2014. Shortly after that, he fell into a new job—lobbying for Bill Lager. Makes sense. Lager had paid him $45,000 (not to mention the tens of thousands he paid to the Ohio House Republican Caucus during Batchelder’s time as Speaker of the House). Batchelder collected $67,000 from Brennan, and even more if you include Brennan’s wife, Ann.”

Ohio awaits a decision from the Ohio Supreme Court.  Will the court permit the Ohio Department of Education to claw back millions in overpayments from taxpayers to the Electronic Classroom of Tomorrow?  Or will the Court back ECOT’s claim that Ohio law was unfairly updated without enough warning when the state began demanding accurate log-in records to document student participation at the online school?  Steve Dyer reminds his readers that four of the seven justices on Ohio’s elected Supreme Court have received campaign contributions from ECOT’s William Lager.

This blog has covered the ECOT scandal extensively.

Extra: Plain Dealer’s Brent Larkin Summarizes Ohio’s Corrupt Charter School Catastrophe

Brent Larkin, columnist and retired editorial director of the Cleveland Plain Dealer, summarizes the corruption underneath Ohio’s charter school tragedy.  He describes the impact of money in the politics of a state without checks and balances—where all three branches of government are controlled by one party.

Larkin credits the fine reporting of Patrick O’Donnell that has broken the story of corruption in Governor John Kasich’s Department of Education. He wonders if the story will affect Kasich’s prospects as a Presidential candidate.

Ohio is a state where even members of the supreme court depend on campaign donations to get elected—and where the big charter school czars, William Lager and David Brennan, are happy to oblige.

Lots of people are suggesting that, as we can’t get rid of charter schools, we have to ensure they are regulated.  Check out this article and follow Larkin’s links to learn why I am so skeptical of the idea that a lucrative privatized sector can be effectively regulated by a state legislature.

William Lager, Charter Czar, Makes the Drop to Ensure Lack of Regulation of Ohio Charters

It is no longer acceptable to deprecate women as Mike Royko does in his 1978 column “Bucking Hard for the Equal Rights Amendment,” but just for today I am going let Mike Royko’s references to “do gooder ladies” go.  Royko was the very savvy and funny longtime Chicago newspaper columnist. We will focus on his intended topic: the role of money in politics:

“I was talking to an ERA lady recently.  She was fretting that the (Equal Rights) amendment might again fail in Illinois, after all of her hard work… I said, ‘Make the drop.’  She looked puzzled and asked: ‘Make the what?’  ‘The drop. Give them some money.’ She still didn’t understand. ‘Money? For what?’  ‘Bribes.’…  That’s the trouble with the ERA crowd and most do-gooders.  They are earnest, diligent, and energetic.  But they don’t have much sense.  Throughout the history of this state, sly people have been getting what they want out of Springfield.  They haven’t done it by being honest, earnest, diligent, and energetic… They have done it by throwing a shoebox full of money through the transom of a Springfield hotel room.”  (The essay appears on pages 109-111 of One More Time: The Best of Mike Royko.)

What we used to think was the way things were done in Chicago has come to dominate politics everywhere in America.  The result is that the powerful are regularly buying the policies that affect the rest of us, and nowhere is that clearer than in the policies that shape our public schools, the quintessential institution of the 99 Percent.

As with Royko’s column, the subject today is state government, not in Illinois but in my state, Ohio, whose legislature, after a year of crafting some relatively weak oversight of charter schools, went home at the end of June without passing even a weak bill.  Late last month, Patrick O’Donnell of the Plain Dealer reported, “The Ohio House will head off on summer break without voting on the new accountability and financial reporting rules for Ohio’s $1 billion charter school industry that have been in the works for months.  House leaders skipped a vote on the package late last week and have left it off the schedule for Tuesday, the last session before leaving for recess.” “Republican leaders say the delay is to clear up some issues with the just-revised bill.  Others call it an attempt to buy time to water down the bill to please charter school operators who donate to Republican candidates.”  Rep. Teresa Fedor, a Democrat, interpreted the move: “They never will call a vote, which means the tax dollars will continue on the ripoff train.”

As the legislature adjourned for its summer break without doing anything about charters, Doug Livingston clarified the meaning of all this in the Akron Beacon-Journal: “Though there are only 24 online schools among the more than 380 charter schools in Ohio, they receive nearly one in three state dollars set aside (each year) for charter schools or $267 million… The two largest—the Electronic Classroom of Tomorrow (ECOT) and Ohio Virtual Academy—received $185 million in state funding.  Two are run by influential for-profit companies.  White Hat Management, which operates Ohio Distance and Electronic Learning academy founded by Akron industrialist David Brennan, and Altair Learning, which operates ECOT and is owned by Bill Lager.  Brennan and Lager have given more than $1.4 million in political contributions to state lawmakers since 2009….”  It is worth noting as well that recently term-limited Ohio House Speaker William Batchelder, when he left the legislature in January of this year, revolved directly into a lobbying job and took on a very powerful and influential client: William Lager.

On Saturday, in his 10th Period blog, Stephen Dyer published the next chapter in the story of Ohio’s failure to regulate charters.  Dyer shows how William Lager of ECOT and Altair Management knows Mike Royko’s rule about ‘making the drop’: “Just a few days after the Speaker of the Ohio House of Representatives declined to take up House Bill 2… the campaign committee meant to re-elect his members got a familiar maximum level check (as permitted by law) from William Lager, who runs the Electronic Classroom of Tomorrow (ECOT).  Not to be undone, so did the Ohio Senate’s campaign committee.  Both were for $18,798.51.”

Dyer continues:  “Last year, the state of Ohio paid ECOT $104 million to educate the 15,088 students it received from Ohio’s local public schools.  That $6,921 per pupil is nearly $2,500 more than the average Ohio school district received last year from the state before charters, vouchers and open enrollment were deducted.  ECOT’s per pupil state funding is larger than all but 52 of Ohio’s 613 school districts.  And this is for an electronic school without buildings, custodians, buses, heating, cooling, sports teams, etc… The question now is this: Will the contributions keep House Bill 2 from moving this fall?”

Mike Royko clearly understood the rules in Springfield back in the 1970s.  William Lager clearly understands the same quid pro quo politics today around charter schools.  It used to be called “buying votes.”  Today this is just the way things are in Ohio and, I suspect, most other places.

Ohio Legislature Pulls Teeth from Pending Charter School Oversight

A couple of weeks ago, Doug Livingston, the education reporter for the Akron Beacon Journal declared: “No sector—not local governments, school districts, court systems, public universities or hospitals—misspends tax dollars like charter schools in Ohio.  A Beacon Journal review of 4,263 audits released last year by State Auditor Dave Yost’s office indicates charter schools misspend public money nearly four times more often than any other type of taxpayer-funded agency.  Since 2001, state auditors have uncovered $27.3 million improperly spent by charter schools, many run by for-profit companies….”

The day after Livingston’s article ran in Akron, Catherine Candisky broke a story in the Columbus Dispatch about the resignation of the entire board of a Columbus charter subsidiary of the national chain, Imagine Schools.  What happened in Columbus has happened in other places across the country: Imagine is also a real estate company that makes its profits by renting facilities with exorbitant rental fees back to the schools in the Imagine chain.

It is not legal for private Charter Management Organizations (CMOs) to appoint the boards of Ohio’s supposedly nonprofit schools  It is, after all, the responsibility of the charter school board to regulate each school’s relation to the CMO it has supposedly hired.  But such technicalities are routinely ignored in Ohio.  As Candisky explains: “Imagine appointed five new board members to the Columbus Primary school board on Monday night.  They replaced six members who resigned in recent weeks amid ongoing concerns about a high-cost building lease, turnover, and adequate services for students.”

Candisky describes how, “the previous board (the one that resigned) explored closing the school with 150 students attending after clashing with Imagine Schools over several issues, including the academy’s $58,000-a-month lease. The lease is with SchoolHouse Finance, a subsidiary of Imagine Schools Inc., raising questions about a possible conflict of interest.  Board members complained that the $700,000 annual lease consumes too much of the school’s $1.3 million annual budget… SchoolHouse Finance purchased the building in 2005 for $1.5 million and made $2.6 million worth of improvements, according to the auditor’s website.  SchoolHouse sold the building in 2006 for $5.2 million to a real-estate investment trust, then leased it back from the trust to charge rent to the school.”

One recently resigned board member, Leon Sinoff, a Columbus attorney, explained his reasons for quitting.  He was disappointed the board that later resigned was unable to close the school.  He became disenchanted when he learned that Imagine had not told the board about “its financial interest in the lease arrangement.”  He also expressed concern about the low salaries of the teachers, as so much money went to rent of facilities.  The board that resigned was able to raise teachers’ salaries from $30,000 to $32,000, but Sinoff believes the low salaries have been contributing to high staff turnover.

Then on Sunday in the Cleveland Plain Dealer Patrick O’Donnell reported that while bills have been introduced in the Ohio legislature that purport to regulate charters, it is becoming clear that regulations for some of the worst abuses have been quietly removed from pending legislation.  O’Donnell explains: “But the Plain Dealer has learned that this plan of making charters better by rating their oversight agencies… is letting sponsors off the hook for years of not holding some schools to high standards…  The state’s not penalizing sponsors, we found, for poor graduation rates at dropout recovery schools, portfolios of charter schools that have more bad grades than good ones and, most surprising, falling grades for online schools.”

O’Donnell continues, “We found that the state isn’t counting the performance of online charter schools—one of the most controversial and lowest-performing charter sectors—in the calculations in this first year of ratings.  That means that many F-rated charters schools that serve thousands of students won’t be included when their oversight agencies are rated this year.”   Neither will the state regulate what Ohio calls “dropout recovery schools”—charter schools that serve kids who have dropped out and are returning to school or at risk of leaving.

It is interesting that even the agencies that promote charter schools have advocated for better regulation in Ohio.  Spokespersons for the Ohio Council of Community Schools (Ohio’s term for charter schools), the Fordham Institute, and the Ohio Alliance for Public Charter Schools expressed surprise that Ohio is exempting online schools from oversight this year as had been promised.

Stephen Dyer, the education policy fellow at Innovation Ohio, former chair of the Education Subcommittee of Finance in the Ohio House, and a former reporter for the Beacon Journal published a piece at RealClear Education last week that summarizes the charter school morass in Ohio: “Charter schools… have been hijacked in Ohio by profiteers and huge campaign contributors whose great talent is making money and winning elections, not educating kids.  The results have been the poorest performing charter school sector outside Nevada.  How bad is it?  Some charter schools in Ohio can remain open even though they only graduate 2 out of 155 children.  Meanwhile, more than half a billion state dollars that were meant for districts went instead to charters that performed the same or worse than the district last year.”

Dyer reminds his readers that David Brennan, owner and operator of the notorious chain of White Hat Schools— many of them dropout recovery schools that will remain unregulated—and William Lager, operator of the huge and ineffective online Electronic Classroom of Tomorrow (ECOT)—which will remain unregulated, “have given more than $6 million to politicians (mostly to Republicans…) since the program began.”  Their schools have, “collected more than $1.7 billion—about one out of every four state charter dollars ever spent.”  These two charter operators and lavish financial contributors have reaped enormous profits from Ohio tax dollars.  White Hat is a for-profit Charter Management Organization owned by Brennan, and ECOT is served by William Lager’s two privately held companies that provide all services for the on-line academy.

Is Oversight and Regulation of Charter Schools Even Possible in Ohio?

I agree with David Hornbeck, longtime superintendent of public instruction in Maryland and superintendent of the School District of Philadelphia from 1994 to 2000. Hornbeck authorized charter schools in Philadelphia when he was superintendent because he believed at the time that they would expand opportunity for the students, but the evidence from the past 20 years has caused him to change his mind.  Hornbeck refuses to focus on stronger regulation of charter schools, instead believing that charters, which divert public funding to privately managed schools are a bad idea altogether. “States with ‘stronger’ charter laws are not doing better: Advocates say we need a ‘stronger’ charter law, noting that Maryland ranks near the bottom. Pennsylvania’s law is ranked much higher, yet its charter growth is contributing significantly to a funding crisis that includes draconian cuts to teachers, nurses, arts, music and counselors in Philadelphia.”  Hornbeck points out that, “Charters, on the whole, do not result in significant improvement in student performance.”  “Charter funding is also negatively affecting regular public schools.” “Charters do not serve students with the greatest challenges. Charters will be quick to point out they enroll high percentages of low-income students.  Some do.  However, the citywide charter lottery inherently skims.  Every student chosen has someone (parent, pastor, friend) who encouraged and is advocating for him/her to apply and succeed.”

Like Hornbeck, I oppose the flow of public dollars to privately managed charter schools because I believe charters undermine the public schools’ capacity as a system to meet the needs and secure the rights of our nation’s 50 million students.  However, as a taxpayer and supporter of public education here in Ohio, neither can I endorse our out-of-control charter school sector that sucks $1 billion out of the state’s education budget every year.  In Ohio there is virtually no oversight or accountability.  While I believe our society will be strengthened when we return to a fully public system, I cannot oppose better regulation.

At the end of February readers of the Cleveland Plain Dealer were treated to a report from Patrick O’Donnell, who attended a panel at a Denver conference of the Education Writers Association where Alex Medler of the National Association of Charter School Authorizers poked fun at Ohio’s charter school free-for-all as “the Wild, Wild West of Charters.” David Welker, from the National Education Association is reported to have said Ohio’s charter sector is dominated by “grifters” and “cheats.”  From the National Alliance for Public Charter Schools, Todd Ziebarth named K12 Inc., and White Hat Management as “operators who are exploiting things.”  And Michael Petrilli of the Thomas Fordham Institute added Ohio’s Electronic Classroom of Tomorrow (ECOT) to the list of exploiters and added, “Ohio needs a top-to-bottom overhaul of its charter school sector.”

Perhaps surprisingly in a state dominated by charter-friendly Republicans in both houses of the General Assembly and the Governor’s mansion, there is a move afoot in Ohio to regulate charters.  Dave Yost, Ohio’s elected Auditor of State, also a Republican, has turned up major concerns.  In testimony he presented last week to a committee of Ohio’s House (Yost’s testimony is available through a link in the Plain Dealer article in which Patrick O’Donnell covers the story.), Yost describes his office’s investigation: “I’m going to focus on my team’s area of expertise: accountability, finance and governance.  There are many other important factors, especially on education itself that you will consider in your debate.  I will not presume to offer any thinking on them.  By way of background, my office audits every single charter school in Ohio. Since 2001, we have issued findings for recovery in 309 audits… with $27 million in findings for recovery, and $9 million alone during my time in office.  Since I took office, a total of 22 people associated with charter schools—board members, vendors, employees—have been convicted of criminal wrongdoing, and more are waiting for their day in court.”

According to Yost, however, statutory regulation is so weak that his office cannot go after many serious violators of the public trust.  Here is some of what Yost suggests the legislature fix:

  • “Under existing law, a charter school must withdraw a student who misses more than 105 unexcused consecutive hours of school.  That amounts to nearly a month. If the student misses 124 hours, then shows up for a single day, the student gets a new 105 hour clock… That means that it is possible for a student to show up for as few as 10 days of school and (for the school to) receive funding for an entire year.”
  • In the online academies and the charters that mix online instruction with classes taught by human teachers, “you simply can’t count hours online as one-for-one equivalents with classroom instruction.”
  • Charter schools across Ohio receive funding for students on a per-pupil basis, with the students identified not by name but instead by an identification number (SSID).  “We have discovered that schools will often generate a new SSID for a student when they have difficulty finding that student’s previously assigned SSID.  In 2012-2013, we discovered multiple SSIDs for the same student, which wreaks havoc on efforts to track student transfers between schools.”  Of course the implication is that several schools may be collecting state funding for the same SSID, but no one can track which school that particular student is attending.
  • Currently in Ohio, “because of short investment horizons, (charter school) facilities are often funded by front-loaded leases that use a high proportion of (state) revenue in early years to retire the debt over a short amortization.  Then, if the school fails, the realty company, often controlled by the management company, owns the building… Education of our children ought not be a back-door means to acquire real estate.”
  • Yost asks the legislature to require better accounting practices and the elimination of what are known as “sweeps contracts” by which the board of the charter school turns over more than 90 percent of the school’s revenue to a private management company without any transparency in the expenditure of the funds.  Too often even the charter school’s board can get no information about how the money has been spent.  The charter’s board “acts as little more than a pass-through for state money to get to the management company, which then hires the teachers, buys the books, etc.  In this model virtually all the money is spent by a private company and is out of sight of the public.”
  • Finally Yost asks the legislature to give the Ohio Department of Education (ODE) the capacity to oversee charters and take action when problems arise.  “Ohio’s fragmented system of oversight—spread among ODE, governing boards and sponsors—is further complicated by other players who have duties delegated by contract, including management companies and sponsor contractors who serve as de facto authorizers.  In particular, ODE’s role should be explicit.  Is it a sponsor, a coach, a regulator, a funder, a licenser? … At a minimum, ODE should not act as a sponsor.  Under HB 555, ODE is to evaluate the effectiveness of sponsors—how can it evaluate itself?”

Yost’s ideas do not cover even all of the regulatory problems with Ohio’s charter schools, but they would be a good start. Many Ohioans remain skeptical, however, about the probability that the legislature will ever pass laws to strengthen the oversight of charter schools, and especially the notorious schools identified at the Education Writers Association panel—K12’s Ohio Virtual Academy, David Brennan’s White Hat Schools, and William Lager’s Electronic Classroom of Tomorrow.  Brennan and Lager are among the largest contributors to the political coffers of Ohio’s legislators. And Bill Batchelder, until December 2014, the speaker of Ohio’s House, just joined with a number of his former staffers to form a new lobbying firm in Columbus.  Batchelder’s first client?  William Lager of the Electronic Classroom of Tomorrow.

Talk of Charter Oversight in Ohio is Likely Just Talk

Ohio’s governor and members of the legislature have begun talking about regulating charter schools in a state that was called  by an official at the National Association of Charter School Authorizers, “the wild, wild west” of charter schools.  But it’s really only just talk, and the real question is whether the legislature will make any serious effort crack down on the charter sector whose tycoons have continued to fill legislators’ political coffers.

There are serious questions, for example, about whether any of the new regulations proposed by Ohio’s governor or House of Representatives would touch the kind of fraud that was recently investigated by the state auditor, who released a report on Ohio’s so-called “dropout recovery” charters that, he discovered, have been collecting state reimbursements for phantom students who are not really attending the schools.  This blog covered the auditor’s investigation here.

Patrick O’Donnell, a reporter for the Plain Dealer, has been investigating the recent discussions about regulating Ohio’s charters. In this report O’Donnell summarizes the contents of a proposed bill in the Ohio House that would, if it ever passes, prevent some of the really serious problems with Ohio’s charter schools.  And there are some extremely serious problems right now.  For example, if a charter school is failing miserably academically or found to be misusing state funds, the school would no longer be able to, ” ‘hop’ from one sponsor to another if a sponsor, the organization responsible for making sure they do a good job, cracks down on them.”  The bill, if passed, would also require charter school board members to “disclose if they have any family members or business associates doing business with the school.”  And the sponsors would be prohibited “from selling goods or services to the schools they oversee.”  Proposed regulations would require charter schools to have their own treasurers who are independent from the sponsors as well as the management companies hired by the charter school boards.

And while the new law, if passed, would not determine whether desks and computers and other equipment purchased with tax money belong to the charter school itself or the private management company hired by a charter school board to run the school, the new law would at least require the school to have established a clear agreement with the sponsor and management company about who owns the equipment. The agreement would need to define “which entity owns… school facilities and property including, but not limited to, equipment, furniture, fixtures, instructional materials and supplies, computers, printers….”  Currently ten of Ohio’s charter schools are involved in a long running lawsuit to determine if the schools, whose boards want to change management companies, can take with them the equipment purchased with tax money.  For-profit White Hat Management Company, whose management contract all ten schools want to terminate, claims it owns all of the equipment.

Here and here, O’Donnell examines Ohio’s Governor John Kasich’s proposal that the legislature crack down on Ohio’s system of charter school sponsors: “Ohio differs sharply from other states… by allowing many different kinds of agencies to take that sponsor/authorizer role.  In some states, only local school districts, universities or a few state charter boards can sponsor schools.  But Ohio has nearly 70 sponsors and is one of the few states that allows other nonprofit agencies to be sponsors… Some people… have accused sponsors of using schools as a money grab, just to collect three percent annual fees that are supposed to cover oversight costs or to find other ways to draw money from the schools.”  O’Donnell continues, “Asked last week how Ohio can justify having sponsors as a layer of bureaucracy in the process of cracking down on poor charter schools, National Association of Charter School Authorizers’ spokesman Greg Richmond could offer no defense of Ohio’s system. ‘It’s hard to rationalize or justify Ohio’s system,’ he said.”

O’Donnell reports that Kasich will ask the legislature to better regulate sponsors and perhaps eliminate those with low ratings. “The rating system currently has three categories: exemplary, effective and ineffective.  Kasich would add a fourth rating as the lowest: ‘poor.’  When an authorizer is rated as poor, the state would withdraw sponsorship rights and take over sponsorship of all of its schools.”  Current law puts low-rated sponsors on probation and blocks them from adding new charters to their roster until they improve.  Kasich proposes to reward the most successful charters by permitting them go to their local public school board to request that the local board of education place a local property tax levy on the ballot for the charter school in the same way public school districts in Ohio raise local millage.  Charters sponsored by “exemplary” agencies could also qualify for help from a $25 million state fund to be created to assist charter schools to purchase or renovate their school facilities.  The new rules Governor Kasich suggests the legislature pass would even apply to the “handful of authorizers that the state named as permanent sponsors in Ohio’s first charter school pilot project.”  Till now, these sponsors have been grandfathered out of regulations.

Are there reasons to be skeptical?  Yes.  Does all this sound too complicated to pass in the legislature?  Yes. Why focus on the sponsors and ignore the possibility of just regulating particular charters that are known to be wasting or stealing taxpayer dollars and failing to educate children?

One reason for skepticism is that, as O’Donnell reports, past efforts to get the Ohio legislature to regulate charter schools have failed.  In 2012, as part of a proposed Cleveland Transformation Plan, Cleveland Mayor Frank Jackson asked the legislature merely to pass enabling legislation for the formation of a local Cleveland charter school regulatory agency with representatives appointed from the city school board and civic and business leaders.  The legislature did permit the creation of what is  now called the Cleveland Transformation Alliance but denied the Transformation Alliance the right to shut down any charter schools, even if their academic or financial records are abysmal. The Cleveland Tranformation Alliance serves only in an advisory capacity.  The legislature has never even given the Ohio Department of Education the capacity to regulate charter schools or close those whose performance is poor.

Ohio is currently a one party state: Republican governor, Republicans with large majorities in both houses of the General Assembly.   Innovation Ohio recently tracked the political contributions of Ohio’s two biggest charter operators—William Lager of the Electronic Classroom of Tomorrow and David Brennan of White Hat Management:  “Between the two of them, they have contributed about $6.4 million to Ohio politicians and committees since 1998. Of that, less than 3 percent went to Democrats.”

It is clearly in the financial interest of Ohio’s legislative leaders that charter schools not be regulated.

Charter Titans’ Political Contributions Keep Ohio Charters Unregulated

In Policy vs. Politics: Which Will Prevail in the Looming Ohio Charter School Reform Fight? researchers from the Ohio Charter School Accountability Project examine the connection between political contributions made by David Brennan and William Lager—Ohio’s two largest charter profiteers—to prominent Republican state legislators and the passage of Ohio laws that keep Ohio’s charter schools unregulated. The Ohio Charter School Accountability Project is a joint effort of the Ohio Education Association and Innovation Ohio.

The new report documents the profits reaped by Brennan and Lager and the size of their political donations over the years: “Between the two of them, they have contributed about $6.4 million to Ohio politicians and committees since 1998. Of that, less than 3 percent went to Democrats…. Since charters were launched in Ohio in the 1998-1999 school year, taxpayers have sent charter schools $7.3 billion.  Of that, $1.76 billion have gone to schools run by Brennan and Lager.  Schools run by these two men have collected 1 out of every 4 dollars ever spent in Ohio since charter schools first opened.”

Founded by William Lager, the enormous Electronic Classroom of Tomorrow (ECOT) serves 14,561 students, reports the Columbus Dispatch. “ECOT, whose students take classes from home on a computer, grew by 122 percent during Ohio’s eight-year moratorium on new online charter schools. Some of its strongest growth was in elementary grades, including kindergarten.  ECOT now has more students than Canton, Dayton, Dublin or Westerville schools. It is the state’s 10th-largest district. And growth came for ECOT despite its consistently low state report-card results: It ranks among the worst-performing schools in the state.”  While the average high school graduation rate across Ohio’s school districts is 77 percent, ECOT’s graduation rate is only 38 percent. The Dispatch reports that 90 percent of funding for ECOT—$112.7 million last year—comes from Ohio tax dollars.  Here is how ECOT spends some of that money: ECOT paid $21.4 million in 2013 to the two for-profit companies Lager established to provide all services to the school—IQ Innovations and Altair Learning Management. Plunderbund has documented that Lager has earned profits of over $100,000 million from these companies (via Ohio tax dollars) since 2001.

David Brennan owns White Hat Management, the for-profit company that provides all services for 32 supposedly non-profit Life Skills Academies and Hope Academies in Ohio.  In what Pro-Publica has called a “sweeps contract,” privately held White Hat collects—up-front—over 95.5 percent of the funding for the schools it manages, leaving a very small percentage of the state’s money under the oversight of the board.  Ten schools managed by White Hat were forced to sue the management company, a case not yet decided.  They wished to fire White Hat and choose new management companies.  They were forced to sue to try to recover equipment purchased with state funds, but White Hat Management claims ownership of the equipment it says it has purchased.  The Akron Beacon Journal adds that, “Because White Hat had trademarked school names and bought up real estate through affiliate companies, the renegade boards couldn’t force White Hat out of the building.”

The Ohio Charter School Accountability Project’s new analysis connects the political influence of Lager and Brennan to specific laws that have protected charter schools from regulation.  For example: “Perhaps the most insidious example is one Brennan had the legislature institute for dropout recovery schools—of which his Life Skills centers constitute the state’s largest group.  Life Skills had been consistently the worst-rated schools in the state…. However, the state couldn’t close them because they had been exempted from the state’s closure law…. Brennan will have no difficulty living up to state standards.  That’s because a loophole in the law allows a dropout recovery school to stay open even if it doesn’t meet state standards as long as the school improves its graduation rate by 10 percent a year for two consecutive years.  However, that would mean Life Skills of Northeast Ohio would only need to improve to a 1.52 percent graduation rate, or graduate 2.4 students rather than 2 out of 155.  In other words, Bernnan doesn’t have to graduate even a single new student to meet this ‘standard.'”  And as reported by Brent Larkin in the Cleveland Plain Dealer, in the state budget correction bill passed in 2014, the legislature inserted language that allows such students to continue at White Hat Life Skills Academies and the state’s other designated “dropout recovery schools,” at state expense, until they are nearly 30 years old.

Akron Beacon Journal Launches Investigation of Ohio’s Charter Schools

On Sunday, a long article appeared in the print edition of Cleveland Plain Dealer, the launch of an investigation of Ohio’s 393 charter schools.  The reporters phoned or faxed each of the state’s charter schools to begin to create a data base.  Reporters asked: Who runs the building? Who is that person’s supervisor? Is there a management company and what company is it? Who serves on the school’s school board? How can we contact the school board?  When does the board meet?   (The full story appears in Sunday’s Akron Beacon Journal, though its printing cannot be traced to the Plain Dealer, because, the newspaper’s on-line edition, does not post all articles that have appeared in print.)

The reporters identified themselves as representing, a journalism collaborative of the University of Akron, Youngstown State University, and Cuyahoga Community College with the Akron Beacon Journal, the Youngstown Vindicator, WYSU-FM Radio (Youngstown State), and Rubber City Radio (Akron).  Why did the print-edition of Cleveland’s Plain Dealer pick up the story?  Some of the journalists at are studying journalism here in Cleveland at Cuyahoga Community College.  And not only did Rubber City Radio and WYSU carry it, but so did WKSU (Kent) and public radio’s State Impact Ohio news service.

The new investigation is clearly a creative strategy of  Ohio’s most progressive newspaper on matters that affect public schools.  Doug Oplinger and his partner Dennis Willard were the top investigative reporters on Ohio school vouchers and on the DeRolph school funding case all through the 1990s.  Oplinger is now the Beacon Journal‘s managing editor.  In an interview Monday with WKSU (Kent State), Oplinger said that the data base being created by will be “used by parents, researchers, policy makers and reporters to track the performance of the publicly financed, but privately run, schools statewide.”

Oplinger predicts will be looking at conflicts of interest when the members of school boards supposedly overseeing charter schools are being recruited by officials at the management companies—a violation of federal law.  According to WKSU,  “Oplinger says the next step in the series will include examining who owns the property in which many charter schools operate.”

The Beacon Journal followed up on Monday with an in-depth report from its excellent education reporter, Doug Livingston, on the recruiting and functioning of school board members at David Brennan’s charter schools, managed by his private White Hat Management Company, a for-profit with 32 Ohio schools.  Privately held White Hat collects over 95.5 percent of the funding, leaving a very small percentage of the state’s money under the oversight of the board.  Livingston points out that under federal law schools managed by not-for-profits are supposed to be run independently of any management company the board sees fit to hire: “If the board is not independent of the company, the IRS is supposed to throw up a red flag.  But (Ohio) state law allows private companies to throw out nonprofit boards that challenge them.”  One White Hat school board member reported to Livingston that Nancy Brennan, daughter of David Brennan had “asked him and his wife to serve.”  When ten members of the board of one White Hat school tried to change management companies: “Because White Hat had trademarked school names and bought up real estate through affiliate companies, the renegade boards couldn’t force White Hat out of the building.”

Again in this morning’s Beacon Journal, Livingston takes up another problem with the laws that govern Ohio charter schools: transportation. Public school districts are required to transport children to charter schools.  Because children in charters are picked up from their homes and delivered  to schools all around the city (without the possibility for normal neighborhood bus routes): “State officials have forced traditional public schools to crisscross their cities to pick up and deliver children to privately run charter schools, often while cutting transportation to their own kids…  A child attending a traditional pubic school and transported on a district bus cost on average $4.30 per day in 2012. The average cost for a charter-school student: $6.18, or $1.88 more per day.”  Livingston continues: “A private contractor on average charged districts $5.45 per child to go to a traditional school and $12 to go to a charter school.”

The investigation itself remains at a very early stage.  Student reporters have been making calls and sending faxed requests to the state’s nearly 400 charter schools.  While they report that Governor Kasich told the Ohio Newspaper Association, “We’ll work with you any way we can.  I’m not going to hide from you,” the student reporters did not encounter a spirit of cooperation from many of the charter schools they contacted.  Sixty-nine, 25 percent, provided the information requested by reporters.  At other schools students were treated rudely, messages on answering machines never answered, promised materials forgotten. Reporters were frequently referred to websites where the requested information was not posted.  At Imagine Akron Academy, “office manager Jeanette Twitty wanted to know, ‘What do you do with this information?’  She put the reporter on hold, and upon returning, said school superintendent Wendy Hubbard ‘would not like to give out any information because that’s something she hasn’t heard of.’  When the reporter asked if he could send a fax with the list of questions, Twitty responded: ‘OK, you can fax it over.  If she’s interested, she’ll give you a call back or fax it back.  If she’s not interested, you won’t hear anything from her.'”

White Hat Charter Scandal Continues in Ohio

This week, for the first time in my memory, the Cleveland Plain Dealer reports extensively on the scandal of White Hat Management, the charter school operation owned by powerful Akron political contributor, David Brennan. In Funds are at Issue in Charter School Suit the newspaper reports on a case that has now been appealed to the Ohio Supreme Court.

Several White Hat schools, trying to pull out of the network, sued White Hat in 2010 to find out what equipment belongs to the management company and what belongs to the school. The plaintiff schools won at the trial court and appellate level, but White Hat continues to appeal the case. At issue is that White Hat, a privately held corporation, is not required to explain how much it spends on salaries or equipment. Not even to its own appointed school boards or to the staffs at its schools.

What the Plain Dealer does not point out this morning is that the public’s interest is a little different than the interests of the boards of the schools trying to leave the network.

White Hat is known to take 96 percent of the state revenue provided for the schools, but White Hat is not required to document publicly how much goes into educating the children and how much is taken as profit by owner David Brennan.

The attorney for White Hat, Charles “Rocky” Saxbe is reported in today’s paper as explaining “that the company already has provided as much information as state law and the Ohio auditor’s office require.” That is of course the problem: the state of Ohio has failed its obligation to protect the public from waste and to protect children from low performing schools. Charter school boards appointed by Charter Management Organizations are not in a position to provide adequate oversight over the corporations that appoint them.

The other problem, as the Akron Beacon Journal reported on June 29 is that David Brennan, a huge political contributor, got a boost of $1,400 per child in Basic Aid in the biennial budget that our governor signed into law on June 30. This is far higher than the increase in state aid for traditional public school districts or for other charter schools, even those posting far higher test scores than Brennan’s schools.

In a 2010 pastoral letter sent to the President and Congress, the governing board of the National Council of Churches wrote: “We believe that democratic operation of public schools is our best hope for ensuring that families can secure the services to which their children have a right. On balance, we believe that if government invests public funds in charter schools that report to private boards, government, not the vicissitudes of the marketplace, should be expected to provide oversight to protect the common good.”

For more about troubles in Ohio’s charter schools, read this new report from Innovation Ohio: Unfair Funding: How Charter Schools Win & Traditional Schools Lose.