Imagine in FL: New Charter, Unresolved Issues

Imagine was awarded a charter in Sarasota County Schools last night.  Here is an evaluation of their application.  I've cut and pasted a few snippets below.  Unlike most other posts about Imagine, I'll mostly leave the commentary to the side and instead allow the charter review committee to express their concerns.

Here is the intro summary provided by the committee:

The Charter Review Committee found the application to be well-written and founded on good educational principles. The applicant has experience with operating a K-8 school in the district and the application evidenced knowledge of the district’s systems and processes. Several areas of concern were raised by CRC members during the application review process. The applicant responded in a timely manner to all requests for additional information and clarification. Governing board members described their support and involvement in the school during the interview process. There appears to be significant parent, student and local government support for the proposed school.

The CRC has continuing concern about several areas of the application. While the applicant has met the standards, the CRC is aware of the unique challenges of providing a range of services for students at the high school level. Issues of teacher certification, course offerings and diversified needs of students face any high school but those can be intensified in a small school. The applicant should adequately plan for the need for additional personnel and financial resources to adequately meet those challenges.

The CRC is concerned about several aspects of the governance structure of the applicant. The current structure allows for the Imagine Schools, Non-Profit (ISNP) an entity providing services to the school, to appoint or dismiss local governing board members giving the local board less than total control of the school. The applicant has indicated a willingness to address this concern during contract negotiations if the application is approved. The ability of the governing board to carry out its statutory responsibilities is dependent upon having appropriate local control. The CRC would recommend that any charter, if offered to this applicant, contain safeguards for the separation of interests and responsibilities in organization and finance between any entity providing services to the school and the local governing board.

The applicant describes the organizational relationship of the proposed school with Imagine Schools, Non-Profit as a partnership rather than an Educational Service Provider (ESP). The applicant has clearly defined the services to be offered to the school by Imagine Schools, Non-Profit. The CRC views the services offered by ISNP to be those normally associated with an ESP.  The business and action plans of the plan and budget submitted with the application have significant detail to provide the CRC with confidence that the applicant has adequately planned for the opening of a school. Initial review of the budget revealed the need for a minor correction which was made upon request.

Details of comments and concerns of the Charter Review Committee follow.

The committee noted (my bold):

The application identifies Imagine Schools at North Port, Inc. as the Florida non-profit entity (organized under Chapter 617, Florida Statutes) applying for the charter and being responsible for the oversight of the operation and financial management of the school. However, the application goes on to state that the sole member of the identified non-profit entity will be Imagine Schools Non-Profit, Inc. (ISNP) a Virginia based non-profit corporation. As the “sole member” of Imagine Schools at North Port, Inc., ISNP has the authority to appoint and dismiss board members at will, calling into question the independence of the board and its ability to fulfill its statutory obligation to oversee the operation of the school. Additionally, ISNP is clearly identified as an “advisor and provider of resources” to the school, for which it will certainly be paid a fee. Thus, ISNP will be conducting business with the governing board whose membership it controls. Such an arrangement does not appear to have adequate safeguards to prevent “self dealing” and raises issues with regard to the board’s ability to ensure that transactions between the board and ISNP are the result of “armslength, negotiated agreements consistent with the board’s statutory responsibility to manage public funds responsibly. The application as presented would appear to be problematic with regard to the legal structure of governing board, the adequacy of policies and procedures for board operation, and the provision of a clear and sensible delineation of roles and responsibilities for governance and school management.

The authority to appoint or remove board members brings up memories of the infamous Bakke Memo.  It's not quite the same, and, as you'll see below, Imagine did agree to amend this section.

More concerns:

The primary contact for the submitted application is Justin Matthews (an Imagine employee) rather than a member of the governing board.

And a bit more:

While the application describes the responsibilities and an obligation of the governing board, the ability of the board to perform its duties is compromised by the ability of ISNP to appoint and dismiss board members.

And here's Imagine's response:

Most charter schools in Florida are organized pursuant to Chapter 617 of the Florida Statutes, and this is the Chapter of the Florida Statutes under which the Imagine Schools at North Port, Inc. is authorized. It is also identical to the structure of the Imagine School at Broward, Inc., which was approved to open a charter school in August of this year by the Broward County School Board. Another charter school, which organized as a nonprofit corporation with a single member (KIPP Jacksonville), was also approved to open in August of this year by the Duval County School Board.

The Applicant’s board is responsible for overseeing the operations of the School. This board is made up entirely of Sarasota County residents who have already been serving on the board of the Imagine School at North Port. No members of the board are employees or officers of ISNP or any other related companies. As board members of this existing school, they have overseen the expenditure of public funds on behalf of the school, which has been subject to independent annual audits. They have demonstrated their ability and skill to oversee the operations of this existing school as required by Florida law. As to the ability of ISNP to appoint and remove board members, in order to provide additional assurances beyond those already demonstrated by the past experience of the existing board, the Applicant is willing to amend its organizational documents to reflect the same level of control by ISNP as for the Imagine School at Palmer Ranch. This would still require final appointment or removal approval by ISNP, but such approval would not be unreasonably withheld.

And then there's a section where Imagine claims to be a parent/affiliate of the new school, and not an education service provider (ESP).  Here's the committee's response:

The applicant’s statement that the school will not use the services of an ESP is simply not persuasive. It is clear that ISNP will provide extensive services to the school in several areas and will be paid for those services. ISNP appears to be an ESP pursuant to the ESP definitions provided in the Florida Model Application. This section, therefore, should be completed as a part of the application. The information required for this section would appear to be especially relevant given the concerns expressed in Section 9, Governance

Appendix A Despite the assertion in the application that the school will not utilize an ESP there is a 9 page “Affiliate Agreement” at the end of Appendix A. The Affiliate Agreement clearly defines an extensive array of services that will be provided to the school by ISNP and how ISNP will be reimbursed for those services. It is unclear as to whether this proposed agreement was the result of any arms-length negotiation process between the school’s governing board and ISNP

And Imagine's response:

While ESP’s are not defined in Florida Statutes or rules, it is clear from the Model Application Form that the type of ESP evaluated by this section is one that is totally unrelated to a charter school. However, the Florida charter law, in Section 1002.33(9)(g)2., Fla. Stat., allows charter schools to have parent organizations, and a parent organization is related to its subsidiary. Therefore, while ISNP cannot be the type of ESP addressed in Section 12 of the Model Application Form, Florida charter schools are clearly permitted to have parent organizations. In the absence of a section in the Model Application Form that specifically addressed parent/subsidiary relationships for charter schools, the Applicant consulted with the Florida Department of Education to try to find an appropriate section of the Model Application Form to include information about its parent/subsidiary relationship with ISNP. As a result, the Applicant included such information in Section 9 (Governance) of the Application, in response to the question regarding “partners” of the School.

Florida charter law allows charter schools to have parent organizations. Fla. Stat. s. 1002.33(9)(g)2. Parent organizations routinely provide services to their subsidiaries. While there is no statutory reference for the arms-length negotiation requirement referenced by School District staff, this requirement seems to conflict with Section 1002.33(9)(g)2., Fla. Stat., which allows Florida charter schools to have parent organizations. Nevertheless, the Affiliate Agreement clearly identifies the valuable services that will be provided to the Applicant by ISNP. Such services are provided at rates commensurate with the market and are being provided at the same cost as the services provided to the existing Imagine School at North Port and Imagine School at Palmer Ranch.

And the committee's final comments (my bold):

The CRC expressed concern that the activities provided to the local school by Imagine Schools, Non-Profit appear to be those normally associated with an Educational Service Provider. The applicant states that the services provided (clearly identified in an Affiliation Agreement) represents allowable services by a parent organization and the relationship with this parent organization is described fully in other parts of the application. The CRC remains concerned that there is continuing lack of resolution on whether the parent company of the applicant meets the definition of an Educational Service Provider.

The Standard is fully met