Ohio looks to overhaul charter school laws

Some of the issues raised in a lawsuit
against White Hat Management are
addressed in a bill to overhaul Ohio's
charter school law.

A series of events, including a lawsuit, has led the Ohio General Assembly to propose updating the laws on charter schools.

Saying they wanted to address issues of transparency and accountability, Rep. Mike Dovilla and Rep. Kristina Roegner, both Republicans, introduced House Bill 2 which would significantly alter the relationships charter schools have with their sponsors and management companies.

Much of the language was the result of an existing lawsuit pending before the Ohio Supreme Court which deals with ownership of the equipment in a charter school.

The case is Hope Academy Broadway Campus, et al. versus White Hat Management Company et al.

The main question is whether White Hat, which Hope Academy hired to perform day-to-day management of the charter school, owns the equipment purchased for the school, or whether White Hat was merely acting as the agent for the school which would then have ownership of all goods purchased on its behalf.

And since charter schools - also called community schools - are public, there is another issue of whether or not management companies can be audited for how the public dollars are spent.

It's an intriguing case and it has implications far beyond the 10 charter schools that are part of the lawsuit. The Ohio Supreme Court ruling can have implications for any company receiving public dollars to perform a public service.

But the General Assembly didn't want to wait and thought it best to address this - and other - issues in an overhaul of the law regarding charter schools, their management companies and their sponsors.

Just to clarify, there are three entities in a public charter school. A sponsor is a local school district, an educational service center, a university or a non-profit entity. Each charter school has a governing authority which is usually a board, like traditional public schools have elected school boards.

Then there is the operator. An operator can be an individual or company that performs day-to-day management services via a contract with the sponsor; or it can be a non-profit organization that provides programming oversight, again through a contract with the sponsor, though it retains the ability to end the contract if the school fails to meet its quality standards.

Under H.B. 2, a low-performing charter school would not be allowed to change sponsors without the prior approval of the Ohio Department of Education.

It also addresses various contractual issues:

• Contracts between sponsors and the boards must contain performance standards, including the applicable state report card measurements.
• Contracts between sponsors and the boards must include an addendum with a detailed description of each facility and mortgage data (principle, interest and name of lender).
• The financial plan in the contract between sponsor and board is subject to review and approval by the Ohio Department of Education and must include the most recent financial statements for the school.
• All new and renewed contracts between the board and the operator must include provisions that address early termination of the contract, the notification procedures and a listing of facilities and property ownership.
• Sponsors must provide a yearly report of the amount and type of expenditures made to provide oversight and technical assistance to each school.
• Requires copies of financial and enrollment records be sent monthly to the sponsor, the board members and the fiscal officer.

There are also a number of provisions that address conflict of interest:

• Employees of a school district, an educational center or a vendor who has a contract with a district or service center cannot serve on the board of a charter school for which the district or educational center is a sponsor.
• Charter school board members will have to file a yearly disclosure statement that identifies any potential conflicts of interest.
• Requires that the designated fiscal officer of a charter school be employed or under a contract with the board of the school.

The bill mandates that the state Department of Education develop, maintain and publish an annual performance report for all operators of schools in the state. It also requires the DOE, by the end of the year, to make recommendations regarding performance standards for charter schools for which a majority of their population is students with disabilities, and determine the feasibility of removing such schools' exemption from permanent closure.

Not all the provisions in the bill will make it through committees in the House and Senate.  In fact, during sponsor testimony in the House Education Committee, Dovilla called the bill a "starting point" for discussion about the overhaul of charter schools.

And there are a number of ideas which the House Education Committee members asked about, including whether or not the law to close charter schools that score a D or F three years running should apply to traditional district schools; whether there should be a residency requirement for the charter school board members, and whether charter school board members who are volunteers can be subjected to the same disclosure and conflict-of-interest rules as traditional school board members.

While the bill has generally been well-received, with the understanding that some provisions may be added and subtracted, one group thinks it doesn't go far enough in spelling out ownership of the assets used in a charter school.

Sandy Theis, executive director of ProgressOhio, a left-leaning policy group, said that requiring contracts "to delineate which gets what assets after the contracts expire...misses the point: Neither should own the assets. They belong to the taxpayers who paid for them."

Ohio Education Association President Becky Higgins also called the bill a starting point. Her organization and Innovation Ohio spelled out three principles they have for overhauling charter schools:

• the accelerated closing of failing charter schools
• making charter schools subject to the same public records laws as traditional public schools
• funding public charters in a way that does not penalized district schools

Rep. Bill Hayes, who chairs the House Education Committee, said he'd support faster closings if the state could identify a school that was actually failing. He also said he'd be interested in applying those same standards to traditional public schools.

But Higgins said No Child Left Behind already has standards for closing district schools that are failing and that any state law would have to align with the federal one.

But even with NCLB, there are still public schools that are failing:  Pickett Academy in Toledo is one example.

The Ohio Association of Charter School Authorizers supports the bill, but with a few reservations. Peggy Young, president of OACSA, urged members to judge sponsors on their outcomes, not just on how they spend money.

The bill is still pending in the House Education Committee.