Law & Courts

Union Accuses Charter Operator of Skirting Ohio Law

March 14, 2006 4 min read

The Ohio Federation of Teachers, long a vocal critic of charter schools, issued a report last week that portrays one for-profit charter operator in the state as far more concerned about making money than improving student learning. It argues that the schools it operates are nothing more than a “chain of company stores” in violation of state law.

The analysis follows a series of reports that the Ohio affiliate of the American Federation of Teachers has written in recent years criticizing White Hat Management Inc. The privately held Akron-based company operates 34 charter schools serving some 16,000 students in Ohio, as well as 20 schools in other states with 6,000 students.

“This report shows clearly that [White Hat Chairman] David [L.] Brennan has been allowed to circumvent numerous state laws, and that profit, not helping children learn, is the primary motive,” said OFT President Tom Mooney in a March 7 statement.

“Education Empire: David Brennan’s White Hat Management Inc.” is published by the Ohio Federation of Teachers.

The 82-page report, jointly prepared by the OFT and the Food and Allied Service Trades Division of the AFL-CIO, outlines a long series of charges about the company and its chairman.

Thomas F. Needles, a White Hat consultant, said Mr. Mooney has long been unfairly savaging the company.

“The theme is just that … there’s some grand conspiracy by Mr. Brennan and White Hat to somehow bilk the taxpayers,” he said. “It’s a patently absurd charge and one we reject categorically.”

He added, “You have to understand that it’s a series of vicious professional and personal attacks that are also replete with errors, omissions, and outright lies.”

Mr. Needles declined to go into detail, and neither the company nor Mr. Brennan issued a formal response to the report.

‘Company Stores’

The report charges that schools run by White Hat are not truly independent from the company. For instance, the report says the same nine individuals constitute the boards of eight White Hat schools. In addition, four of those trustees also serve on the boards of five others.

The report suggests that many of those board members were handpicked by White Hat.

The report says the name of each school operated by White Hat is a trade name registered by White Hat Learning Systems. The company has established a limited-liability company under the name of each school, the report says.

White Hat is the “sole vendor” for its charter schools, renting them buildings, selling them computers, books, and other supplies, and leasing them teachers and administrative staff, the report says.

And it says that White Hat has loaned substantial sums to five of its charter schools. Public school districts may not carry operating debt beyond the current school year, the report notes.

“The ability of a charter school’s board of trustees to negotiate fair and equitable contracts for its school is further compromised when they are indebted to the management company that operates the school,” the report says.

In an interview, Mr. Mooney said all of this amounts to a violation of state law. “The law says that a charter school has to be nonprofit, and have its own board,” Mr. Mooney said in an interview. “This is illegal because this is a chain of company stores. … The schools are not just operated by White Hat, they are owned by White Hat. … The veil has been removed.”

J.C. Benton, a spokesman for the Ohio Department of Education, said he had not reviewed the report.

“The state does not have a direct relationship with White Hat Management,” he said. “White Hat handles the day-to-day operations of some schools in Ohio. I’m not going to defend David Brennan or White Hat Management. The sponsors of the schools have control and they use White Hat, which provides services.”

Terry Ryan, the vice president for Ohio programs and policy at the Thomas B. Fordham Foundation, a Washington think tank that backs charter schools, said the union report is part of an ongoing battle between the OFT and White Hat Management.

“The union is out to try to bring down charter schools by attaching them to David Brennan,” he said. “I think he does things that make him an easy target.”

Mr. Ryan said that while he found some of the charges questionable or even “loopy,” others appear to show reason for legitimate concern, such as questions about the independence of the boards for the schools. He emphasized that he had not independently researched that information.

Mr. Ryan noted that the Fordham Foundation serves as an authorizer of charter schools in Ohio. “And, as such, we think it’s important that there be a separation between the governing authority for the school and the management company that runs it,” he said.

He added: “The way that the White Hat schools have operated has alienated folks in local communities. … They’re seen as outsiders or carpetbaggers. It’s the perception that I hear from people.”

The report cites many other issues of concern, from campaign donations Mr. Brennan and his family members made to state lawmakers writing charter legislation to the use of charter school buildings as collateral to secure a loan for one of his companies.

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A version of this article appeared in the March 15, 2006 edition of Education Week as Union Accuses Charter Operator of Skirting Ohio Law

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