Now the Dallas Morning News reports that, despite Texas state law that disallows for-profit outfits to receive tax dollars to operate charter schools, Imagine, Inc. has been approved by the ethically-challenged Texas Education Agency to run a school in McKinney, Texas:
By MATTHEW HAAG / The Dallas Morning NewsWe certainly can't have oversight getting in the way of the entrepreneurial spirit. Surely Imagine, Inc. will do the right thing. Just like the Bush-controlled IRS will tell the world that Imagine, Inc. only imagines itself to be non-profit.
The Texas Education Agency last week approved the opening of a McKinney charter school run by a company that other states rejected over concern about its tax status.
The Texas board of education allowed the for-profit Imagine International Academy of North Texas to run the school even though state law allows only nonprofit organizations to open state-funded charter schools.
Imagine argued that it would use the nonprofit status of an affiliate charter school in Indiana.
State officials said the Texas attorney general reviewed the arrangement and determined that it was allowable before the school was approved.
But school officials in Florida and Nevada have raised questions about other Imagine schools, saying they have not proved they are nonprofit and that public money should not flow into for-profit hands. The company has opened dozens of schools in 13 states.
Multiple calls to the Imagine Schools Inc. headquarters in Arlington, Va., for comment were not returned.
In Florida, Imagine intended to open 15 schools.
But the company met heavy resistance from local and state education officials, and withdrew its applications. Florida education leaders questioned whether Imagine was a certified nonprofit or a business attempting to profit from public education money.
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Ken Berger, CEO of Charity Navigator, a nonprofit watchdog group, said the setup skirts the rules.
"The charter seems like a shell corporation created for the for-profit corporation," he said. "It looks like they found a way around regulations."
According to the Internal Revenue Service, Imagine Schools Inc. is not a certified nonprofit – or 501c3. Ms. Brady said the company is expecting to receive the status soon. The company applied for it in November 2005.
Mr. Berger said the process should take months, not years.
Mr. Berger said it's fine for nonprofits to contract with for-profit corporations. But when most of the contract appears to be made with the same company, the relationship becomes "questionable," he said.
"It seems like they are giving oversight duty to Imagine," he said. "It seems like the tables have turned and Imagine Schools are managing them. But it certainly sounds like a questionable arrangement."