The definition of a charter school just got a little bit clearer, at least by Franklin County Judge John Bender’s latest summary judgment. Bender is the judge in the White Hat Management case, in which 10 of White Hat’s school boards sued White Hat in order to get a peek at the management company’s financial records. White Hat is one of the biggest for-profit charter school operators in Ohio, running about 45 schools in five states, most of them in Ohio.
The school boards say they can’t govern their schools if they don’t know how the money is spent, since they have to turn over at least 95 percent of the funds the school gets to White Hat. On the other hand, White Hat says they comply with everything state law requires of them, and since they’re a privately held company they don’t have to disclose all the details.
Well, last week Judge John Bender issued a decision in which he said charter schools accept public funds and so are public entities. He went on to say that a charter school’s governing authority and management company (in this case, White Hat) are public officials. The implication of this is that the governing authority and management company are subject to the same public records law as other public entities and thus must release the same information about their operations as traditional public schools.
April Hart, the lawyer representing the school boards, wrote in an e-mail that she was “ecstatic” to read the judgment. This is what she had to say:
The Court articulated a very precise opinion on how the Charter School statutes should be interpreted. Judge Bender’s Opinion lays out the correct structure that Ohio is missing here- which is an agency relationship between the Governing Authority as the fiduciary and the Management Company as the agent-not the other way around.
From this Opinion, it holds that Charter schools cannot and should never have, delegated the ultimate decision making authority to a Management Company. The Governing Authority has a statutory duty to oversee programs, employee salaries ect.
The Opinion does not say that a Management Company cannot make a profit. It simply allows for transparency to the Board and the public on what is being spent at the building level versus how much state and federal money is going to a company’s profit margin.
Now perhaps, and I pray the Boards, who are legally entrusted to educate the children can take a long hard look on the best way to spend public dollars to educate its children. It means that students and staff will be more important than markets and profits.
I hope this Opinion resonates throughout Ohio. I hope that legislature and ODE will do its part to ensure laws and guidelines to reign in management companies who are out of control. I know that this Opinion will put many people and organizations out of their comfort zone but if the goal is to truly see progress in education than I’m sorry there has to be growing pains.
But Charles Saxbe, the lawyer representing White Hat Management says not so fast. He said if you read the decision, “it makes some conclusions with respects to the court’s interpretations of the law but hasn’t made any specific findings.”
“The court has asked for supplemental memorandum which we will file and while April Hart and her allies may be quite happy over the decision the court says in its last paragraph ‘there are questions of fact that remain’ and the court is proceeding with the case and everybody needs to file more information so I’m not quite sure why Miss Hart is so elated,” he said.
In other words, this argument is far from over.
You can read the decision for yourself right here: