COLUMBUS, Ohio -- A group of Cleveland and Akron charter schools is in open rebellion against the for-profit management firm that runs the schools.
An unusual lawsuit brought Monday by 10 governing boards of Hope Academies of Cleveland and Akron and Life Skills Centers of Cleveland and Akron alleges that a 2006 state law passed by majority-party Republicans is unconstitutional and gives the for-profit company unchecked authority.
At the center of the lawsuit is White Hat Management, the for-profit company whose five-year contract to run the 10 charter schools in Northeast Ohio expires on June 30. Charter schools are publicly funded but privately operated. In the case of White Hat Management, 96 percent of the state funding flows to the company.
The governing boards say that White Hat's interest in making a profit conflicts with the schools' goal to educate. The suit, filed in Franklin County Common Pleas Court, says that the boards are "virtually impotent to govern the schools."
They say that White Hat has refused to provide detailed financial information such as unaudited quarterly financial reports required under the management agreement with the schools. White Hat has also refused to provide details on grants received and also failed to spell out what funds were used to purchase school property and equipment since 2004, the suit charges.
White Hat Management said in a statement that the company has not been served with the complaint and could not comment directly on it.
"It is unfortunate that these entities have taken this action which potentially will disrupt the lives of thousands of students and jeopardize the future of these schools," the statement said. "White Hat will continue its efforts while this matter is resolved."
A representative from the Ohio Council of Community Schools -- the sponsor of the Hope Academies and Life Skills Centers that are part of the lawsuit -- did not return calls for comment.
The largest for-profit charter school operator in Ohio, White Hat Management was founded by wealthy Akron industrialist David Brennan. He and his wife, Ann, have been major political contributors as the legislature has dealt with charter school issues in recent years. In 2007, for example, they gave a combined $733,300 to state candidates and Republican organizations, including $400,000 to the Ohio Republican Party, according to state records.
The schools' governing boards say they are in a pickle because the state law allows White Hat to remove and replace the boards if they seek to end contracts with the company and negotiate with other potential management companies.
And any board that does manage to successfully petition to get a contract with White Hat ended is stripped of the school facilities, furniture and equipment -- even though it may have been initially purchased with tax dollars. That's because, under the state law, White Hat owns those assets.
"That's the untenable situation -- tax dollars are being used to purchase assets for public schools that are in turn owned by private corporations," said Carlo LoParo, a spokesman for the group of charter schools. "These boards are essentially being given the option of being fired or giving their schools away."
An Ohio charter school expert said the "accountability chain is totally upside down" in Ohio.
"The lines of authority have been blurred in Ohio," said Terry Ryan, vice president of Ohio programs and policy for the non-profit Thomas B. Fordham Institute. "Therefore, we see this confusion which makes it prime territory for a lawsuit."
Ryan said the Ohio law is "the kind of law that was crafted by a management organization to protect their interests."
The provisions that govern charter schools were rewritten as part of House Bill 79, a controversial remaking of Ohio charter school law sponsored by former Cincinnati-area Rep. Tom Raga, a Republican lawmaker who ran unsuccessfully for lieutenant governor in 2006. The legislation languished in conference committee before being moved on a 4-2 party line vote by Republicans over Democratic objections.
It was signed into law by Republican Gov. Bob Taft on Dec. 29, 2006 -- a little more than one week before Democratic Gov. Ted Strickland took office.. . . .