‘Crony Capitalism’ For Ohio Charter Schools Draws Criticism
An investigation into a chain of Ohio charter schools has even charter school supporters condemning what they dub “crony capitalism,” while others are demanding new regulations in response.
The investigation, conducted by the Columbus Dispatch, found that the for-profit charter school chain Imagine Schools has been benefiting from creative real estate deals. According to the investigation, several Imagine-run charter schools are paying a huge portion of their state subsidies towards rent, which sometimes amounts to over half of all funds received from the state government.
Imagine Columbus Primary Academy, for instance, is paying over $700,000 in rent this year, while it expects to pay just $614,000 for the salaries and benefits of teachers. At one school, over 80 percent of all state aid was being spent on rent. Experts say that charter schools should aim to spend only about 15 percent of their budget on rent, in order to avoid harming student instruction. Across all of Imagine’s schools in Ohio, the Dispatch found, the total is closer to 25 percent.
Said rent is going to a company called SchoolHouse Finance, which is simply a subsidiary of Imagine. What it means is that the company is essentially profiting off of its own rent payments, with the implication that the company is also diverting money that could be used for educational purposes.
Imagine’s schools are hardly academic world-beaters: All but one of the charters under the company’s management received either a D or an F on Ohio’s public school report card for 2014.
Imagine has defended itself by claiming that many of the buildings it uses required significant remodeling to be suitable for schools. It also argues that expenses are currently overly weighted towards rent because it is paid on a per-student basis and most schools are under-capacity. If enrollment rises, it says, rent expenses will fall more in line with what is recommended.
Even charter school supporters, however, say the arrangement is a red flag.
“It’s legal, but that doesn’t mean it should be,” Greg Harris, the Ohio director of pro-charter StudentsFirst, told the Dispatch. “We don’t want charter-school operators profiting as landlords.”
Meanwhile, Michael Petrilli, the president of the D.C.-based Fordham Institute, a conservative education reform think-tank that is favorable to charter schools, tweeted on Sunday that the process was “crony capitalism.”
Such a scheme would not be unique to Ohio. In Missouri, the state shut down six Imagine charter schools in 2012 after an investigation by the St. Louis Post-Dispatch highlighted a similar rent tactic as well as poor academic performance. Several other states, including Indiana and Florida, as well as the District of Columbia, are giving Imagine a second look as well.
At least one liberal group has responded to the Dispatch’s investigation by calling for increase regulation of charter schools in Ohio, and condemning Republican Gov. John Kasich for an alleged failure in oversight.
“Our ‘fiscally conservative’ governor needs to explain why he’s allowed all this money to be wasted and all these kids to be hurt,” said ProgressOhio executive director Brian Rothenberg in a statement released Monday.
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