“Education Inc., Part II” — Imagine Schools under the microscope

by David Safier
I've been out of town, so I haven't written about the second and third installments of the Fort Wayne, Indiana, Journal Gazette's series on Imagine Schools: Education Inc. This is about Part II, It's 'Our school, not theirs,' which is a doozy.

The glue in this installment is the email Imagine CEO Dennis Bakke sent to the top people in the corporation, saying the local school boards should be little more than rubber stamp groups whose job is to vote Yes on whatever Imagine Schools wants to do.

"But what's wrong with that?" Imagine higher-ups want to know. After all, the corporation decides where to put the schools. It arranges for the buildings, has the curriculum and the expertise in running the schools. Why should local boards interfere?

The answer is, Indiana Imagine Schools, like most of Arizona's, are non profits, and the national Imagine Schools is a for profit corporation. According to the IRS, local non profits are supposed to run the show. They can hire an Educational Management Organization (EMO) to bring in management and educational programming, but the final decision belongs to the boards.

IRS guidelines for determining whether a charter school qualifies as tax-exempt hinge on whether the school operates solely for charitable purposes or whether an individual or a taxable company benefits.

"The board may not delegate its responsibility and ultimate accountability for the school's operations to a for-profit management company without raising the issue of whether the organization is operating for the private benefit of that company," an IRS publication says.

Put simply,

IRS rules forbid vendors to have control over the non-profits that hire them.

But for the 3 Indiana Imagine schools, the school's boards were an afterthought, a necessary evil to meet the state's charter school laws.

. . . no local board has ever taken bids from other management companies, publicly debated Imagine's contract or publicly voted on approving it. Imagine officials filed the incorporation papers for each, applied for tax-exempt status for each and applied for the charter for each.

Greg Richmond, president of the National Association of Charter School Authorizers in Chicago, said it appears Ball State, which granted Imagine's charters in Fort Wayne, failed in its duty to ensure local control.

"That is absolutely unacceptable," Richmond said. "If the governing board is compromised, from that point on everything else has the potential to be compromised."

The boards of the 3 Indiana Imagine Schools appear to understand their positions as Yes Men:

In the 2 1/2 years the Imagine – Fort Wayne Charter School board has been meeting, not a single "no" vote has been recorded at its meetings, documents show.

None has been recorded for the two other Imagine school boards here, either.

The important question for us in Arizona is, do our's Imagine School Boards have any genuine local control, or are they just McDonalds-like franchises of the Virginia-based corporation?

The answer appears to be: same corporation, same procedures. The McDonalds rules hold. ("Do you want fries with that diploma?")

Each of Arizona's 13 non profit Imagine charters has its own board, but in fact, there are only two distinct boards between them. Nine schools are run by one set of board members, and the other four are run by another set. The boards, and the schools, appear to be wholly owned subsidiaries of the for profit corporation. Local control is virtually nonexistent.

More on the Arizona boards and IRS regulations in another post.

This is one of a series of posts, Peeking into Charter Schools. If you have information you wish to contribute, you can post comments or email me: safier@schooltales.net.