Ohio Moves to Keep Charter Operator’s Expansion in Check

Ohio has refused to sponsor four new charter schools because state officials said the for-profit company running them would wield too much power.

Akron-based White Hat Management, the state’s largest operator of charter schools, wanted the Ohio Department of Education to oversee six new academies.

The state agreed to sponsor two of the six schools—one in Warrensville Heights and the other in Akron. But it denied approval of the others because White Hat “appears to delegate significant aspects of the school’s decisionmaking (including personnel and academics) to the operator,” according to a letter that details the decision.

That undermines the power of school boards, said the letters from Mark Michael, the director of school sponsorship for the education department. Mr. Michael also criticized a plan that would have given a White Hat-affiliated board member the right to dismiss other school board members from their positions.

White Hat could appeal the decisions in common pleas court within 15 days.

White Hat officials did not respond to a call and email asking whether the company would appeal or seek another sponsor for the denied schools. The company operates 41 schools, including K-12 online charters, brick-and-mortar K-8 charters, and alternative-learning charters for students ages 16 to 21 in five states, according to its website. Online schools are offered in Ohio and Pennsylvania only, and traditional charters are offered in Ohio only.

Charter schools, like traditional districts, are publicly funded. But unlike traditional districts, which typically have publicly elected school boards that oversee administrators, charter schools are run by appointed school boards but must also have a sponsor that oversees the schools and boards.

‘Checks and Balances’

The Ohio education department hasn’t sponsored new charter schools for years. But a new state law that was sought by White Hat allows the department to sponsor up to five new charter schools next school year. White Hat was the only applicant for those spots, which were to be filled on a first-come, first-served basis.

The department’s rejection is significant, said Terry Ryan, the vice president for Ohio programs and policy at the Thomas B. Fordham Institute, in Dayton, which affiliated with the Washington-based Thomas B. Fordham Foundation. It oversees several Ohio charters and has pushed for a better balance between charter sponsors and operators.

“They’re basically taking seriously the division of responsibilities. You have to have checks and balances in these relationships,” Mr. Ryan said. “This is good.”

White Hat has been criticized for its management practices. It acts as a whole-school operator, meaning it hires and fires; owns the supplies, books, and curriculum; and handles just about every aspect of running the school. It takes almost all of the state per-pupil funding in return.

A group of White Hat schools sued the company in 2010 to find out how it spent that per-pupil money. White Hat has been fighting the suit since, but last month, an Ohio judge ordered the company to disclose its financial documents. Because of the amount of state funding the company receives, White Hat is a “public official,” Franklin County Judge John F. Bender ruled. White Hat plans to appeal, claiming it followed disclosure guidelines and was approved by the state auditor.

“Requiring White Hat to disclose proprietary financial information far in excess of what is required by state law and its mutually agreed-upon management contracts amounts to retroactively changing the rules by which we must play,” White Hat President and Chief Executive Officer Tom Barrett said in a statement.

The two new approved charter schools were given the go-ahead with “the understanding that they were making changes to their governance structure for a truly independent and self-sustaining governing authority,” Mr. Michael said in an email sent to reporters.