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Imagine Schools Inc.
Imagine Schools Inc. is the largest charter school management company in the nation. The for-profit company is hired by local school boards to run day-to-day operations at charter schools.
Founded: 2004 after purchase of Chancellor Beacon Academies
Headquarters: Arlington, Va.
Schools managed: 74
Students: 35,000
Cathie Rowand | The Journal Gazette
School buses pick up students at Imagine MASTer Academy, 2000 N. Wells St., at the end of a school day.

EDUCATION INC. -- Part II: It's 'Our school, not theirs'

Company's boss gives little authority to charter boards

The president of Imagine Schools Inc. sent his employees a memo last fall outlining how he thinks his schools should operate.

In Dennis Bakke's opinion, it shouldn't be local people making decisions about how local tax dollars should be spent; it should be the Imagine executives employed by the for-profit educational management company based in Arlington, Va.

"In none of these cases did the board have a major role in 'starting' the school. They didn't write the charter. They didn't finance the start up of the school or the building. They didn't find the principal or any of the teachers and staff. They didn't design the curriculum. In some cases, they did help recruit students," Bakke wrote. "I do not mind them being grateful to us for starting the school (our school, not theirs), but the gratitude and the humility that goes with it, needs to extend to the operation of the school."

In fact, one Imagine executive said local school boards should be nothing but figureheads.

Paul Faber, an Imagine Schools Inc. regional executive director, told the St. Louis Post-Dispatch last week boards are needed only to hold the charter.

"Ultimately, do you really need a board to run a school?" he asked the newspaper. "No. You really don't."

Bakke's ideas for who should be making the decisions concerning Imagine's 73 charter schools across the country go against the spirit of the charter school movement, which calls for independence and innovation in return for greater accountability.

Bakke's memo, written in September 2008 and obtained several weeks ago by The Journal Gazette, says it is Imagine, which is hired to run the day-to-day operations at the schools, that creates, owns and runs its charter schools, not local boards. The memo has been widely published since it appeared in the St. Louis Post-Dispatch on Oct. 25.

The memo, which warns against letting local board members think they are in control, says it is not a policy pronouncement and is just a draft for discussion purposes only but was sent to all Imagine executives and appears to be a national blueprint for how the company operates.

That blueprint is being copied in Fort Wayne, where copies of Bakke's book, "Joy at Work," are for sale at the school office.

Not only do Imagine's local boards not vote on anything of significance – busing, curriculum, employees – but since their inception, the boards' involvement in the schools have been minimal.

The problem with local boards, Bakke opined in the memo, is that members sometimes think they should have the right to make decisions.

"Whether or not a person has been on a board or not…most people believe that boards are 'governance' boards. In other words, they are 'in charge' of the school," Bakke wrote. "Without you saying anything to them, they will believe that they are responsible for making big decisions about budget matters, school policies, hiring of the principal and dozens of other matters. This is the way most non-profit boards work, so no one should be surprised by the assumptions held by the board members you select for an Imagine School."

State law requires charter schools to have tax-exempt status from the IRS. 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.

But Bakke says in his memo the schools don't belong to the local boards. Bakke's vision of a board as a body only there to give advice – rather than the independent, ultimate authority described by the IRS – is echoed on the company's Web site, which says local school boards are "an advisory body that works together with Imagine's leaders, teachers, and staff."

Whose school is it?

In Fort Wayne, Imagine's charter schools were formed by local businessman Don Willis. But Imagine was on the scene setting up Imagine MASTer Academy before any parents group was organized. Imagine officials incorporated the non-profit entity and applied for tax-exempt status for it, and the contract with Imagine for the first school was signed five months before the local board held its first meeting.

Their first attempt to open a school was rejected by Ball State University because it gave even more control to Imagine than the current setup.

In that proposal, Bakke incorporated a local company that was owned by Imagine Schools Non-Profit Inc., Imagine officials appointed board members and the company's vice president was to be a board member. Ball State called that a conflict of interest.

But even with the current setup, which Ball State approved, it was Imagine officials who decided to open Imagine Schools on Broadway, and it was Imagine officials who have been working to open a third school, Imagine Bridge Academy.

For all three schools, 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."

Larry Gabbert, director of Ball State's Office of Charter Schools, said attorneys looked over Imagine's governance structure before the charter was issued, and everything passed the legal test.

IRS rules forbid vendors to have control over the non-profits that hire them. But the best way to keep control of a local board, Bakke wrote, is for Imagine executives to select the board members themselves.

Willis – who acknowledged completing a handshake deal with Bakke months before a local board was even formed – agrees the board should be hands-off.

"Our role is to look Imagine in the eye and say, 'here's what we want to achieve,'" Willis said. "I should not be telling Imagine how they must operate to execute the goals I set for them."

Bakke did not return repeated phone calls seeking comment.

'Not there to make decisions'

Troy Bell knows exactly how Imagine Schools Inc. operates.

Bell used to be the director of development and new school concepts for Imagine Schools in Indianapolis but was laid off after what he calls a "power struggle" between him and Guy Platter, Imagine executive and former principal of Fort Wayne's Imagine MASTer Academy.

Imagine executives in Virginia look for cities in which to begin charter schools, pinpointing areas with poor test scores that are not meeting federal accountability standards, cities with low property values and states with solid charter school laws, Bell said. They then solicit community members in those cities to "start" the charter schools and become members of the board, he said.

It's not people self-organizing, it's a corporation encouraging the structure, Bell said.

"That initial stuff is what places the whole charter concept into a realm of potential misuse," Bell said.

In theory, Imagine Schools facilitates the charter application process, but in reality, an Imagine official completes the entire application and local people sign it, Bell said. The board then enters into a contract with Imagine Schools to manage the operations of the school.

At any time, the board can cancel that relationship, but then it's left with nothing: Imagine employs the teachers, administrators, usually owns the buildings and often owns the curriculum.

"Even though (Imagine) formally doesn't control the charter or the charter board, the school would really not exist if Imagine doesn't stay, and that's the leverage Imagine has over a board," Bell said. "That's basically the same model Imagine uses everywhere."

If Imagine – Fort Wayne Charter School were to break ties with Imagine Schools, for example, it would have to find a new campus after its lease expires, would have no Web site and would have to change its name. Teacher contracts would transfer to it, but those teachers would have no health insurance or other benefits until the school board bought them.

Bell confirmed the message in Bakke's memo is company policy.

"The attitude that Mr. Bakke has is the boards are there to support the efforts of the company, they're not there to run the school," Bell said. "They're there to provide us with the flavor and the culture of the community that we as outsiders of the community might not be privy to. They are not there to make decisions. They are there to help build relationships. That's the general attitude I was privy to when I was with the company."

It's a message that's getting through: 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.

"We have a real, meaningful board," Willis said. "We have some clout."

'We control who stays'

Heather Presley joined the Imagine – Fort Wayne Charter School board in the fall of 2006, thinking it was a good way for a parent to be involved in her children's education.

And she wasn't worried that the board didn't meet for six months after she joined, because the school was just getting started and everything was in the formative stages. She was told it was not board members' role to oversee the process of creating the school.

"The actual organization of everything, my understanding was that that was already taken care of, or already decided," Presley said.

Presley, the city of Fort Wayne's director of Housing and Neighborhood Services, said board members had no role in negotiating the contract with Imagine, a deal that gave the company 12 percent of the school's total revenue and gave it almost all decision-making power. Documents released Friday show the contract with Imagine for the MASTer Academy was approved by board members signing a resolution five months before they held their first meeting.

Presley also said – and board meeting minutes show – board members never discussed curriculum, policy, enrollment, discipline, goals or operations, although they were all spelled out in the application for a charter.

She attended two meetings – both of which were extremely informal, she said – missed two meetings and then resigned from the board because she didn't have time to commit. Now, she's glad she left.

"When you sit around a table with people you know and trust from the community, you assume things are on the up and up," Presley said.

Bakke's memo details his ideas for keeping boards under control – make members feel wanted by approaching them not for decisions, but for advice.

"The best way to acknowledge your need for a board member is to keep them informed of what is happening and ask them their advice on ALL significant decisions before the school, including hiring and firing decisions," Bakke wrote. "I believe that most of the problems we have with boards are caused not from taking decision making away from them, but not involving them in the advice process."

And when board members do become a problem by thinking they are in charge, Bakke has an easy answer: Get rid of them.

"Sometimes you can protect yourself from board members that you chose, by getting undated letters of resignation from the start that can be acted on by us at any time would also help," Bakke wrote. "Some states allow 'founding' boards that can be changed once the school starts. That is a good idea if we can control who stays and who goes."

Controlling who stays and who goes is exactly the technique Imagine Schools used to rein in a board for a proposed school in Texas that was asking too many questions about Imagine's contract and Imagine's decision-making power.

And the tool Imagine Schools Inc. used to exert that control was its school in Fort Wayne and the power the board members here unknowingly gave away.