FORT WAYNE, Ind. – The local school board was about to spend almost $100,000 of taxpayer money on a busing service for students.
But there was no discussion of bids to ensure taxpayers got the best deal. There were no questions about cost, insurance or alternatives to this contract awarded to a southern Indiana trucking company.
Most importantly, there was no vote.
Despite spending millions of tax dollars a year, the board of this public school votes on almost nothing.
Not the $87,510 a year to operate school buses. Not $114,871 to run a lunch program. Not which teachers are hired or whether to hold summer school, or even whether to borrow more than $1 million for operations.
All those decisions and many more were made by a private company from Virginia, though Internal Revenue Service regulations say tax-exempt organizations such as this one must have independent, local control.
Welcome to Imagine charter schools.
When Imagine board members do make major decisions, they often do so by signing papers outside of public meetings, with no public debate and no public vote. Instead of local control, a Journal Gazette investigation found, executives with the for-profit management company tell the Fort Wayne board members how decisions will be made and how money will be spent.
Local school officials deny any wrongdoing. Imagine corporate officials, who operate two Fort Wayne schools and hope to open a third next year, did not return calls for comment.
We’ve not heard any comment from the IRS in any way that I’m aware of, said Don Willis, a local businessman who founded the Imagine charter schools in Fort Wayne and is chairman of the Imagine-Fort Wayne Charter School board.
Other board members refused to answer questions or said they did not know the answers.
Founded in 2006 and opened to students in the fall of 2007, Imagine-Fort Wayne Charter School Inc. is a local non-profit agency that supposedly runs Imagine MASTer Academy, a public charter school paid for with taxes. Its sister entity, IFWCS Campus II, runs Imagine Schools on Broadway, and IFWCS Campus III will run the planned Imagine Bridge Academy.
Charter schools are public schools, funded by the state on a per-student basis. They can also receive money from federal grants, state tuition support and private foundations, but they are free of some of the regulations imposed on traditional public schools, so they can use innovative techniques and try to improve education.
Imagine Schools Inc., a for-profit company in Arlington, Va., makes nearly every important decision in Fort Wayne and has even used the local agency’s non-profit status to expand its charter school empire of 73 schools in 12 states.
Ultimately, for all charities, the board of directors should be the entity that has full oversight and control over the organization, said Bennett Weiner, chief operating officer of the BBB Wise Giving Alliance, a national charity-monitoring organization based in Virginia. The staff reports to the board of directors, not the other way around.
That might be news to board members, the IRS, state regulators and the Hoosiers whose tax dollars pay for those schools. For the 2007-08 school year, Imagine MASTer Academy received $2.9 million in taxes, plus a $1.24 million low-interest loan from the state.
Who’s in charge?
Charter schools, in theory, work like this: A local group wanting to create an alternative to traditional public schools decides what it’s looking for in an educational experience, incorporates, and applies for a charter.
Usually, because those founders do not have experience running a school system, they hire an outside contractor to handle day-to-day operations. If the charter is approved, the state sends tax dollars to the school on a per-student basis, funding its operations. The schools also can qualify for government grants and special low-interest loans.
But Imagine MASTer Academy, 2000 N. Wells St. in Fort Wayne, started differently.
In April 2006, when Willis announced he wanted to start a charter school, Imagine Schools Inc. was already on site and involved – a year before the board would have its first meeting. In September of that year, Imagine-Fort Wayne Charter School Inc. was formed, allegedly the local organization that would start the school and contract with Imagine Schools Inc. of Virginia to run it.
But the contact person for the non-profit Imagine-Fort Wayne Charter School was Imagine Schools Inc.’s executive vice president, Jason Bryant, and the corporation’s address was Bryant’s house in Fort Wayne. The incorporator was Imagine Schools’ attorney, Joseph Miller, of Baker & Daniels in Indianapolis.
Two months later, the local non-profit filed for tax-exempt status with the IRS – the paperwork was again handled by Miller – and signed a contract with Imagine Schools Inc.
The contract was signed by Willis; board members never publicly discussed it or voted on it, as it would be five months before their first meeting. Instead, they signed a resolution that claims it has the same authority as if it had been approved unanimously by the board at a public meeting.
Indiana Public Access Counselor Andrew Kossack said there is no provision in the state’s Open Meetings Act that would allow such action. State law requires all public bodies to take all official action during public meetings.
That contract gave away the board’s power to make decisions on issues such as busing, hiring and the name of the school itself. It also gave Imagine Schools Inc. 12 percent of every penny the school took in.
Larry Gabbert, director of Ball State University’s Office of Charter Schools, said Imagine was already on the scene when he and the university became involved in the chartering process. Ball State fields applications and authorizes many of Indiana’s charter schools.
Gabbert said an attorney looked over the Fort Wayne schools’ governance structure and determined everything to be legal before a charter was issued.
A lot of times, we’re not involved. Sometimes a group comes together and doesn’t approach us until they’ve decided to move ahead with the charter, Gabbert said. We ask questions, but as I said, it’s not always ideal.
Greg Richmond, president of the National Association of Charter School Authorizers in Chicago, said Ball State University, which granted all of Imagine’s charters in Indiana, should have never done so considering the hand Imagine Schools Inc. had in the charters’ founding.
That is absolutely unacceptable, Richmond said. What’s unacceptable is a charter school should not be approved under those circumstances.
Richmond said charter authorizers should ask how the management company was chosen, what the process was and what other companies were considered.
Ball State does ask those questions in a form that proposed schools must fill out. On the forms for all three Imagine schools in Fort Wayne, only the names of the schools vary – the answers are largely word-for-word, even down to the typos.
One of the easiest things to notice would be, if all three purportedly separate groups all gave the same answer, it’s obvious the board is not the one giving the answers, Richmond said. It’s just not acceptable.
‘An advisory body’
In February 2007, two months before the Imagine MASTer Academy board’s first meeting, officials again applied for the school’s charter.
The application was at least the third version filed, because sponsor Ball State University kept demanding changes in the school’s governance structure because Imagine Schools had too much control. The application detailed everything about how the school would be run, including curriculum, enrollment and discipline, none of which had been voted on by the board. The contact person for the charter was Imagine Schools’ Bryant.
But that experience was common. In the 2 1/2 years since, board members have been left out of all sorts of decisions – including opening new schools.
Board minutes show that the first time members heard in public about plans to open Imagine Schools on Broadway was in October 2007. That was when Imagine’s Bryant told the board that the company’s for-profit real estate subsidiary, Schoolhouse Finance, had agreed to buy the Emmaus Church for the new school and that an application for a charter had been sent to Ball State.
No vote on opening a new school was ever taken. No public debate was ever held.
By the time board members learned of the plans in October 2007, they had already been board members for three months of a new corporation they had ostensibly created.
Again, the registered agent was Imagine’s Bryant, and the incorporator was Imagine attorney Miller. According to meeting minutes, board members were not even told that two weeks before they – as a new, separate corporation named IFWCS Campus II Inc. – had applied to the IRS for tax-exempt status. The attorney for that application was Imagine’s Miller.
Willis said the board never uses Imagine attorneys, then said Miller was used only to file the paperwork.
The same situation happened with Imagine Bridge Academy – a school set to open next fall at an undetermined location in Fort Wayne. That school’s corporation, IFWCS Campus III Inc., was formed at the same time as IFWCS Campus II and also incorporated by Miller.
Willis signed the IFWCS Campus III contract with Imagine Schools Inc. on March 18, 2008, the same day the school applied for tax-exempt status with the IRS – an application handled by Miller.
No board ever voted on the contract, the application for exempt status or the charter application to Ball State. The proposed school wasn’t mentioned at any public board meeting until April 2008, and the new, separate board didn’t meet until October 2008.
Bryant did not respond to four requests for comment. Miller also did not return phone calls.
How hands-off are Imagine’s local school boards?
On July 23, 2008, the board of IFWCS Campus II – Imagine Schools on Broadway – held its first meeting, a month before the first day of school for a brand-new campus in a building still being renovated.
Despite the chaos of a startup, with teachers and staff being hired and students being enrolled, the board voted on only two items: Its meeting schedule for the rest of 2008 and its meeting schedule for 2009. In both cases, it voted unanimously to meet quarterly, meaning its next meeting would not come until October, two months after school started.
Even when public education is lousy – and in many communities, it is lousy – there’s accountability and a transparency that comes along with it. We know who to blame, said Trent Stamp, who was the founding president of non-profit watchdog Charity Navigator for seven years.
But when you have this type of skirting of the system, it’s hard to figure out who’s accountable and who’s to blame. This is the flaw of charter schools and charter school management companies run amok: Who do you go to?