THE BLOG
05/27/2014 12:21 pm ET | Updated Jul 27, 2014

Why Is This Charter School Management Company Still in Business?

Because they are private corporations it is very difficult to get information on the operation of for-profit charter schools, charter school management companies, and the financial groups behind both the for-profit charter school industry and the non-profit sector. This company, National Heritage Academies, stands out because of its electronic "paper trail." It is a cautionary tale and a warning about what can happen if charter schools ultimately replace public school systems.

According to a May 2014 report by the Annenburg Institute for School Reform at Brown University, there are an estimated 6,400 public charter schools in the United States that enroll over 2.5 million students. Their rapid expansion since 2000 is fueled by hundreds of millions of federal, state, local and private dollars. In New York State, where Governor Andrew Cuomo is a strong advocate for charter schools, there are currently 209 operating charter schools. Almost 90% are in New York City.

In 2005, the State University of New York closed the Rochester Leadership Academy Charter School because of poor academic performance by its students. Four year's later the former charter school's board of directors sued the for-profit management company, National Heritage Academies. The suit claimed that National Heritage Academies failed to provide the promised "management, operation, administration, accounting and education" which resulted in the school losing its state charter. In addition, the board blamed the management company for the loss of over $2 million.

In March 2010 the Rochester Leadership Academy Charter School board and National Heritage Academies reached an out of court settlement. National Heritage Academies agreed to "donate" $175,000 to a non-profit organization selected by the charter school, however because of a confidentiality clause in the agreement no other details were released to the public.

National Heritage Academies is a for-profit corporation based in Grand Rapids, Michigan. It operates 75 schools in nine states with approximately 50,000 students. In 2011-2012, it was the third largest for profit charter school company in the United States based on number of schools with second largest number of students.

It operates nationwide although most of its schools and students are in Michigan. In 2012, the Michigan Department of Education identified National Heritage Academies as the operator of more than half of the charter schools in the state labeled as "focus schools" because of poor student performance.

National Heritage Academies has important political ties that have helped in keep in operation. Its founder and chair, J. C. Huizenga, is a member of the board of directors of the Michigan affiliate of the right wing Mackinac Center for Public Policy think tank and a major Michigan Republican Party donor. National Heritage Academies is affiliated with the rightwing lobby group ALEC and is a member of its Education Task Force. Huizenga was also a major campaign donor to the presidential campaigns of George W. Bush and Mitt Romney.

This was not the first or last time National Heritage Academies was involved in legal or educational disputes. In 1998 the American Civil Liberties Union in Michigan sued National Heritage Academies for promoting religious activities, including prayer sessions for parents, in its charter schools there. The suit was later dismissed. In 2000, National Heritage Academies was accused of planning to use a curriculum in its Rochester charter school that presented creationism as a scientifically based theory and as an alternative explanation to evolution. Company schools continue to offer what they describe as a back-to-basics curriculum with a moral focus.

In 2010, the New York State Legislature prohibited new charter schools managed by for-profit companies, however it did not require existing charter schools to discontinue contracts with management companies. In December 2012, the Office of the State Controller audited the financial report of Brooklyn Excelsior Charter School managed by National Heritage Academies and could not determine how $10 million in annual public funding was being used because National Heritage Academies refused to provide full financial reports. The company claimed the information was "private and proprietary." The audit report also noted the board of the charter school was "lax in fulfilling its fiduciary responsibility" and an apparent conflict of interest because National Heritage Academies "employed a Board member at a salary of more than $138,000."

In May 2014, the New York Daily News reported that National Heritage Academies charged its Brooklyn Dreams Charter School $2.3 million a year to rent space in a Catholic Church that the management company leased from the church for much less. The going rate for rental of this kind was between $14.25 and $25.50 per square foot, but National Heritage Academies charged the school $46.99 per square foot. While neither the management company nor the church would admit how much the company was actually paying to the Brooklyn diocese, the New York Post claimed it was only $264,000 per year. National Heritage Academies also charged another charter school it manages, Brooklyn Scholars, well over the market rate.

For all of this you would expect quality school programs. But you would be wrong. National Heritage Academies manages four charter schools in New York City. The Brooklyn Dreams Charter School at 259 Parkville in Brooklyn; the Brooklyn Excelsior Charter School at 856 Quincy Street in Brooklyn; the Brooklyn Scholars Charter School at 2635 Linden Boulevard in Brooklyn; and the Riverton Street Charter School at 11834 Riverton Street in St. Albans, Queens.

Riverton Street Charter School got a grade of A on its New York City issued report card for academic year 2012-2013 compared to other schools with similar student demographics, although its performance significantly trailed schools in more affluent communities. However, even compared to their peer groups in poorer minority communities Brooklyn Dreams Charter School only got a grade of B, Brooklyn Scholars a grade of D and Brooklyn Excelsior a grade of F.

Despite this checkered history, National Heritage Academies continues to expand. In Tennessee, it is one of the major supporters of a law that will allow for profit charter school companies to operate in the state.

The question remains. Why is this charter school management company still in business?