Lack of oversight an issue for model charter school system

Records show close ties at Richard Allen where there should be independence

Ohio taxpayers contribute millions of dollars to a Dayton-based charter school system known for the type of strong academic performance that would make any urban educator envious.

But Richard Allen Schools are also becoming known for something less desirable: questionable oversight of how the schools are run and how their money is spent.

A Dayton Daily News examination found that of the $6.5 million in tax dollars Richard Allen Schools received in 2009, more than $1 million went toward management and consulting firms founded by Jeanette C. Harris, Richard Allen’s CEO and president.

State auditors announced in March they uncovered $89,067 in misspent funds and numerous bookkeeping omissions and irregularities, and a “deeper, special audit” of the system’s finances is now under way. The schools are currently operating with a $234,000 deficit, according to Harris.

Harris characterized most of the audit findings as misunderstandings, and denied she has undue influence in her schools’ oversight.

“Our thrust is educating children. That is the drive from the administration all the way down to the janitor,” she said. “We don’t steal, we don’t cheat. There is no misappropriation of money in this organization.”

A Daily News examination of Richard Allen Schools’ tax filings, audits and public records shows Harris has close ties to every part of her schools’ operation, including the board charged with overseeing how the money is spent. For example:

• Kids Count of Dayton, the nonprofit sponsor charged with independently overseeing Richard Allen Schools, was founded by Harris. Until 2009 she also served as its vice president.

• Another nonprofit she formed, the Institute of Management Resources, manages millions in tax dollars for Richard Allen’s three Dayton schools and one school in Hamilton. Harris served as president of that organization until 2008.

• A for-profit company Harris founded and still runs, the Institute of Charter School Management Resources, provides consulting for the schools and collects lease payments on its facilities.

• The school’s sponsor, its headquarters and the management and consulting firms all share the same Patterson Boulevard address. Kids Count also listed Harris’ Kettering home as an address as recently as 2009, state records show.

“Essentially they are providing oversight for themselves,” said Piet van Lier, who researches K-12 education for Policy Matters Ohio, a think tank with liberal leanings. “It is unbelievable that this is allowed to happen in Ohio charters.”

Harris is one of the area’s highest-paid educators. Last year she made $220,490 — the bulk of which she says came in consulting fees from charter schools in other states, and not as president of Richard Allen Schools.

But Harris isn’t the only family member on Richard Allen’s payroll. Her daughter, Michelle Thomas, earns $133,422 as the superintendent of the schools, according to tax records.

Harris doesn’t see the hiring of her daughter as a conflict. “As long as she is doing a good job, I don’t think the board is going to fire her,” Harris said.

Harris’ husband, the Rev. Earl Harris, has also had a strong role in guiding the schools’ vision, though he is not on the payroll. He was once a board chairman for the charters and still attends every school board meeting in a non-voting, emeritus role. Charter schools, which exploded in numbers during the last decade as an alternative to problems in the public schools, are increasingly under fire for their oversight and accountability practices, including what are often close connections between the schools and the governing boards that are supposed to serve as independent bodies.

“To have a successful charter program, you have to have accountability,” said Terry Ryan, a school reform advocate with the Thomas B. Fordham Foundation, which sponsors its own charter schools. He added that a key to accountability is independent oversight.

Some of the loudest voices calling for tougher oversight of charters are coming from charter advocates.

A proposal approved by the Ohio House that limited the clout of charter governing boards brought stinging criticism from Ryan and Chester Finn Jr., president of the Fordham Foundation and a former assistant education secretary in the Reagan administration. State senators removed the provision, but the issue could re-emerge in a conference committee, where lawmakers finalize details in the state budget.

“We are at a crossroads,” Ryan said of the charter movement in Ohio. “The House (proposal) will take us further down that nebulous road where it is not clear who is responsible for what.”

Strong performance

On the most recent state report card, Richard Allen Schools received one “effective” and two “continuous improvement” ratings, or one B and two Cs. Those are strong scores for a system serving an inner-city population. The schools typically outperform their Dayton Public Schools counterparts on state tests, while students at Richard Allen Preparatory posted the highest average score on the 2010 Kindergarten Readiness Assessment-Literacy assessments in Montgomery County, edging out Oakwood students.

Charter advocates and other critics, however, say the solid academic performance masks a more serious problem.

“What happens with the money, how transparent they are and how closely they follow the law is just as important as good performance,” said van Lier, who featured Richard Allen along with several other charters in a Policy Matters Ohio report titled “Authorized Abuse.”

The schools are taking advantage of poor regulation in Ohio monitoring how public money is spent, allowing charters to virtually write their own rules, according to van Lier.

“There are red flags everywhere,” he said. “It is not unique to this school, but perhaps it is an egregious example. It is an indicator of how loose things are in the charter sector. There isn’t really any oversight. There is no one with the will or the power to do any oversight. Really, we already have for-profit charters in Ohio.”

Charters are supposed to be governed by independent sponsor boards, and in 2006 the Ohio legislature tightened restrictions on the number of charter school boards an individual can serve on, limiting it to two.

But the Daily News found that Richard Allen Schools has since routinely used the same board members for all four schools — an apparent violation of the law.

Harris acknowledged the problem and said the board has approved new members. She said she couldn’t name them because they have not been officially seated.

Ohio Board of Education Vice President Tom Gunlock, who sat on the Richard Allen board from 2005-06, said he can see how oversight could be compromised if sponsor boards have members from multiple jurisdictions. But, he said, that’s not really the case with Harris’ schools, which are confined to Dayton and Hamilton.

“All of her schools are serving all the same kids geographically and economically, so I don’t see an issue with that,” he said.

A charter pioneer

Harris said she was drawn into the business of educating young people by her first business partner, the late Warren Wise, who had developed an after-school tutoring program.

The two founded WestPark Academy, a private preschool, in 1996 as a way to offer black children an alternative to traditional public schools that were unsuccessful, the Richard Allen Schools website says. The school was an immediate success and quickly grew as its reputation for high expectations and results spread.

Harris and her husband opened Richard Allen Academy for students in grades 7-9 in 1999.

They have since opened Richard Allen Preparatory, which shares the building with WestPark at 627 Salem Ave.; Richard Allen Academy II, now in the former United Way Building at 184 Salem Ave.; and Richard Allen Academy III in Hamilton.

The schools follow a philosophy borne out of the schools’ namesake, Bishop Richard Allen, founder of the African Methodist Church. A focus is put on teaching academic fundamentals and critical thinking skills while instilling values and an understanding that “excuses and failure are unacceptable,” according to the website.

“We believe you can’t just educate the child, you’ve got to educate the whole family. We spend a lot of time with that,” Harris said.

While teachers are evaluated three times a year, administrators also grade parents twice a year with their own report cards.

Parents who receive a D or F must meet with the superintendent to discuss the importance of being involved in their child’s education before they can re-enroll their children.

Management fee questioned

Harris did not provide copies of tax forms for the Institute of Management Resources, the nonprofit that manages the state money the schools receive, or the contracts it has with Richard Allen Schools. Other tax records and state audits show the company typically receives 10 percent of all state funds allocated to the school as a “management fee.”

In exchange, the management company oversees the schools’ operation, payroll and compliance with state regulations. In 2009, according to state audits, the non-profit received more than $1 million in management fees.

Harris defended the fee, saying it is less than the industry standard of 15 percent. But auditors have questioned the expense, in part because the schools have been operating at a deficit.

In 2009, that shortfall was $1.38 million, but Harris said it has fallen to about $234,000 because the management company forgave fees owed for services.

Richard Allen has repeatedly been late paying bills, including its portion of teachers’ retirement payments to the State Teacher Retirement System.

In February, the schools were more than $90,000 delinquent, forcing the state to use “foundation funding” given to schools to operate and educate students, to make up the difference. To date, STRS officials noted, $145,000 in “foundation funds” have been used to cover the schools’ delinquencies in the retirement account.

State auditors could begin further garnishing the schools’ state funding if the costs of recent state audits are not repaid.

Richard Allen’s management company makes loans to the schools to help catch up these and other late bills. Those loans are listed on the schools’ books, but auditors said they could find no “terms” for the repayment agreements.

Greg Richmond, president of the National Association of Charter School Authorizers, said a lack of transparency is inherent in the system in Ohio.

“The opportunity for fraud is abundantly clear if the management company has free reign to take money out of the school for undefined services and then loan the school money, claiming there isn’t enough money to pay the bills,” he said.

The Ohio Department of Education has initiated a crackdown of sorts. Richard Allen’s sponsor, Kids Count of Dayton, is unable to sponsor any new charters because it failed to follow state rules, submit the proper forms and meet oversight requirements, according to a February letter from the department.

National attention

Harris said the academic success of her schools has drawn attention from around the globe, and she’s built a lucrative consulting business because of it. She said she consults with charter schools across Ohio and in other states, such as Georgia and Connecticut.

“We’ve had people look at us from all over the world,” she said. “They’ve looked at our academic performance. They’ve looked at our financial performance. They looked at our operation and they like what they saw.”

Rhonda Ragland of Trotwood also liked what she saw. That’s why she put her son, Ross, in Richard Allen’s kindergarten program four years ago.

Now 9, Ross just finished third grade at Richard Allen Academy II. This fall, her 4-year-old granddaughter will enter WestPark’s preschool program.

Ragland knew about the recent audit because the superintendent brought it up at a parent association meeting. But she said she is far more concerned about the academic performance of her son and the other children in the school.

“I believe in test scores. I believe in performance,” said Ragland, a mortgage underwriter for Fifth Third Bank in Dayton. “Basically, it’s the only school in this area that’s going to give me the challenge I need.”

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