School Choice & Charters

Millionaire Industrialist Touts ‘White Hat’ Firm To Build Charter Model

By Karla Scoon Reid — May 22, 2002 12 min read
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David L. Brennan wants to rescue America’s children from failing schools. He also wants to make money doing it.

To Mr. Brennan, a millionaire industrialist who wears a white cowboy hat, those twin goals make him the good guy. To his critics, they make him the villain.

In less than four years, White Hat Ventures LLC, the company Mr. Brennan founded to operate charter schools, has become Ohio’s largest for- profit education management company. From its headquarters here in Mr. Brennan’s hometown, the privately held company runs roughly a sixth of the state’s 91 charter schools and spends about $30 million in state money annually.

Changed by Charters: Part 3
Businesses Flock to Charter Frontier
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>Millionaire Industrialist Touts ‘White Hat’ Firm to Build Charter Model
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Yet even as Mr. Brennan polishes plans to open more schools in Ohio and elsewhere, efforts are under way to stop his company cold. A coalition of Ohio education groups filed suit against White Hat Ventures and the state last year. The lawsuit argues that the charter school law that enabled the company to flourish—and that many say Mr. Brennan did much to shape as one of the state’s paramount Republican political contributors—is unconstitutional.

However the ongoing legal struggle is resolved, it’s clear that contention over charter schools run by unabashed capitalists like Mr. Brennan is here to stay.

As the decade-old charter school movement evolves, the Brennans of America are on the offensive, marketing the promise of a better academic experience to dissatisfied customers in an education marketplace that they are determined to transform.

Do-Gooder or Destroyer?

Wearing his signature cowboy hat, glasses, a tweed jacket, and a tie laden with Ohio State University logos, Mr. Brennan appears more grandfatherly than the sinister destroyer of public schools that he is sometimes labeled.

During a recent interview here, however, the charter school entrepreneur didn’t conceal his irritation at having to make the case that he is genuinely concerned about the plight of poor, mostly minority children being undereducated in the public schools.

“I didn’t enter this fray because it’s a good business venture,” asserted Mr. Brennan, who is a former chairman of the board of trustees of Ohio State University, his alma mater. “I truly believe that education is a way out for everybody.”

But the blunt businessman is still committed to the bottom line. He closed his two voucher-supported private schools in Cleveland, saying that a legal fight—now in the hands of the U.S. Supreme Court—had handcuffed expansion of that city’s state-enacted tuition-voucher program. Critics speculate that Mr. Brennan may have shifted his business focus because the $4,900 that White Hat receives for every charter school student is far higher than the state’s $2,250 tuition vouchers.

“I don’t do things that don’t make money,” acknowledged the 70-year-old executive, who stands 6 feet 5 inches tall. “I just don’t think it’s right.”

As for White Hat, he said the company, founded in 1998, is “slightly profitable.” The 16 White Hat-managed charter schools in the Buckeye State enroll roughly 6,000 students—a quarter of Ohio’s 23,700 charter school students. Nonprofit boards of directors oversee the schools. Many schools were created with the sole purpose of contracting with White Hat.

Meanwhile, the company’s seven Life Skills Centers, no-frills charter high schools that rely on computer-based instruction, attract students across the state by promising a fast track to a diploma. White Hat’s Hope Academies, eight back-to-basics charter schools that are slated to become K-8 schools at all but one site, have waiting lists. The company anticipates attracting thousands of students to its newest venture, the Ohio Distance and Electronic Learning Academy, which opened with 100 students completing lessons via computer at home this year.

Now, White Hat Ventures is poised to become a national education chain. The company intends to open eight additional schools during the 2002-03 school year in Ohio, and it says it is engaged in talks aimed at opening campuses in eight other states, including Arizona, Indiana, and Louisiana.

Political Role Debated

While making his fortune turning around ailing manufacturing mills around the country, Mr. Brennan started dabbling in education by founding on-site learning centers for employees.

Later, he became intimately involved in Ohio’s debate over vouchers and charter schools when he led a task force on school choice named by then-Gov. George V. Voinovich, a Republican, in 1992. The panel’s work became the precursor to the state’s school choice law.

Almost every Republican in the GOP-dominated state legislature and statewide offices has received donations from the Brennan family—more than $233,000 during the 1999-2000 campaign cycle alone. Critics describe Mr. Brennan, the state’s top individual political contributor that season, as the chief architect and benefactor of the Republican-led school choice movement in Ohio.

"[Mr. Brennan] wants to buy public policy when it comes to education,” declared Tom Mooney, the president of the Ohio Federation of Teachers, an affiliate of the American Federation of Teachers. “It’s amazing the traction he gets for bad ideas and bad results.”

William L. Phillis, the executive director of the Ohio Coalition for Equity and Adequacy of School Funding, which is involved in a school funding lawsuit against the state, suggested that Mr. Brennan’s political contributions are paying off.

“He has invested heavily, and he is being rewarded more heavily,” Mr. Phillis said. “He can smell a dollar farther away than any other person I’ve ever seen.”

Bristling at assertions that he effectively buys lawmakers’ votes, Mr. Brennan countered that he employs the same tactics as the Ohio Education Association, which gave about $648,000 to political campaigns during the 1999-2000 campaign cycle: backing candidates who share his beliefs.

Ohio union officials further charge that in an attempt to offer “education on the cheap,” White Hat schools employ ill-prepared teachers, skimp on instructional supplies, and disregard special education students—contentions the company denies. Results from state-mandated proficiency tests for 2000-01 show that most of White Hat’s 4th and 6th graders, in some cases in excess of 90 percent, failed to pass all the exams.

“Kids are commodities like toothpaste or belted radials,” Neil Quirk, the vice president of the Akron Education Association, an independent union, said of Mr. Brennan’s approach to education. “They are to be packaged and processed in the manner that yields the greatest profits.”

State Rep. Jon A. Husted, a Republican who is the chief sponsor of a new charter school reform bill and who received $7,500 in campaign contributions in 2000 and 2001 from Mr. Brennan and his wife, rejects such claims.

“I think you need to have a villain,” he said of the businessman’s critics. “Their villain, in this case, wears a white hat.”

The Business of Learning

The Life Skills Center in Akron looks more like an insurance office than a typical high school.

Designed to be replicated economically in any community, the center occupies the fourth floor of an office building and lacks a media center and diversions such as proms or sports.

Teenagers wearing white Life Skills polo shirts sit in tiny study carrels facing glowing Dell computer screens. There’s little bookwork. During a recent visit, some students appeared engaged in their software-based lessons on geometry or English. Others stared off into space or napped.

The first Life Skills Center opened in Akron with 50 students. Four years later, that figure is up to 730 students. A total of 2,650 students attend the seven centers, which are open until 9 p.m. in some locations around the state. So far, 985 students have graduated from them.

“They’re an extremely bright group that didn’t fit into the traditional setting,” said John C. Morris, the president and chief executive officer of White Hat Management, the company’s education management arm. “They did not drop out; ... it was a force-out scenario.”

As for Life Skills instructors, they are considered classroom managers, so the company places no premium on prior teaching experience. About one third of the centers’ 66 teachers are fully certified. Of the 17 faculty members at the Akron center, 13 have substitute-teaching certificates. The average length of teaching experience is three years.

Counseling is available to address students’ social and career challenges. Students are expected to work—many choose food service—in addition to attaining an 80 percent attendance rate in order to earn a diploma.

“It’s a second chance for them,” said Joseph G. Cole, the Akron center’s vocational specialist. “They take full advantage of it.”

A more traditional approach to learning takes place at White Hat’s eight Hope Academies, which enroll 3,350 elementary and middle school students in cities from Akron to Cincinnati.

Students in white and navy-blue uniforms at the Hope Academy Broadway Campus in Cleveland jump to attention to recognize Principal Lydia Harris when she enters their classrooms. More than 400 students from all over the city attend the K-8 school, which formerly was a Roman Catholic school.

The school’s test scores are not impressive. For example, only 6.7 percent of 4th graders passed all of the state’s proficiency tests last year.

Yet Terrell Warren, 13, said he likes Broadway’s quiet environment, and he says he’s learning more than at his previous school.

“The report card I got here is the best I ever got, like in six years,” the 8th grader said.

While the Broadway school relies on a phonics-based curriculum, the remaining seven Hope Academies use a tightly scripted teaching model called Direct Instruction in grades K-3, which is achieving varied results in schools nationwide, according to recent studies. (“Studies Cite Learning Gains in Direct Instruction Schools,” April 17, 2002.)

In addition, every Hope Academy follows a model that includes six computers per classroom, a full-time nurse, an instructional aide in every class, an off-duty police officer, and all-day kindergarten. School principals who lack classroom experience are paired with education supervisors who review lesson plans and conduct classroom observations. Almost half the academies’ 159 teachers have temporary or substitute-teaching certificates.

“What we’re working on is a success recipe,” said Mark F. Thimmig, the president and chief executive officer of White Hat Ventures.

The typical Hope Academy 6th grader is 21/2 years behind grade level. Many students come to the schools failing academically, displaying behavioral problems, or both. For those reasons, White Hat executives say it’s unfair to draw conclusions from students’ poor scores on state tests.

White-Hat Hero?

Mr. Brennan sees his white hat as symbolizing his commitment to lifting the downtrodden.

The tale of the hat dates to 1985, when Mr. Brennan and his business partners bought a bankrupt steel mill in rural Gadsden, Ala. Residents labeled him a “Yankee carpetbagger” coming to town to “chew up” the mill employees. Mr. Brennan remembers a local television reporter asking him: “How’s it feel to ride into town on your big black horse wearing your black hat?”

Taken aback, Mr. Brennan told the reporter that he was wrong. “‘I’m the good guy,’” he recalls saying. “‘I’m saving 1,500 jobs. I’m the guy in the white hat.’”

A local businessman agreed with Mr. Brennan and sent him a white cowboy hat. The hat didn’t fit, but the trademark stuck, and he eventually adopted it as the ideal name and logo for his foray into education in 1998.

But the heroic image Mr. Brennan cultivates clashes with an education culture that often frowns on merging education and moneymaking.

“When you’re operating as a for-profit entity,” argued Deidra M. Brown, a lobbyist for the Ohio Education Association, “you’re going to keep something for the profit margin rather than investing and expanding a program.”

Yvonne Drum, who was fired from White Hat after serving as its curriculum director from 1998 to 2001, said Mr. Brennan’s chief preoccupation seemed to be earning, not learning. She maintained that the Life Skills centers were overenrolling students to receive more state money, and that high teacher turnover left one academy class with four different teachers in a year.

Crowded classrooms taught by teachers whom she considered ineffective led Ms. Drum—who has been an educator for 27 years—to remove her granddaughters from a White Hat academy in Akron, she said. That’s when she was fired for what the company told her were “educational and philosophical” differences. “I think Brennan likes to represent himself as the champion of inner-city kids, but it still boils down to ... profits,” Ms. Drum said.

Others scoff at the contention that Mr. Brennan’s goals are to accrue more power and money.

“That’s ridiculous,” declared Clint F. Satow, the director of the Ohio Community Schools Center, a resource agency for charters. “Mr. Brennan can find more lucrative ways to make money than opening schools.”

Because White Hat assumes the financial risk of running its schools, Mr. Brennan’s effort must be characterized as a “philanthropy,” argued Stephen J. Ramsey, the president of the Ohio Charter School Association, a membership group.

The charter school entrepreneur has spent several million dollars on White Hat to start up schools and extend their reach.

Manner of Speaking

Still, the company does not portray itself as a charity. At the White Hat central office on the top floor of an Akron building owned by Mr. Brennan, employees talk about “customers” instead of students, and “market share” instead of enrollment. The company’s CEO, Mr. Thimmig, specialized in business acquisitions as a senior executive with the car-dealership chain AutoNation.

Consumer satisfaction—or dissatisfaction—will be the company’s ultimate measure of accountability, White Hat officials say. If “consumers” find their services unsatisfactory, they note, White Hat will be out of business.

To Mr. Brennan, companies such as his, which rise or fall based on their own ability to compete, are to be commended, not criticized. “We’re not out rattling tin cups for money,” he said. “The for-profit engine runs the American economy.”

Americans must use that engine, he believes, to drive the kind of educational innovations that can rescue students now languishing in inferior schools. Despite his critics, that is what he says he is trying to do.

“I’m a good guy,” he insisted. “They don’t seem to believe it.”

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A version of this article appeared in the May 22, 2002 edition of Education Week as Millionaire Industrialist Touts ‘White Hat’ Firm To Build Charter Model


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