Rep. Jason Saine (R-Lincolnton)

When Rep. Jason Saine (R-Lincolnton) stood before members of the NC Charter School Advisory Board earlier this month to pitch a new charter school that would be located in his legislative district of Lincoln County, he told the oversight body that he has a unique perspective on what it would be like to open a charter school.

To bolster his charter school cred, Rep. Saine pointed to his long-time relationship with a Florida-based for-profit education management organization (EMO) Charter Schools USA, which would serve as the operating entity of his proposed charter school, West Lake Preparatory Academy.

“I’m probably the most experienced tour guide here because I’ve been to a number of Charter Schools USA facilities across the state,” said Rep. Saine. “They invite me to all the ribbon cuttings and openings, so it’s kind of an interesting perspective that I have.”

That close relationship that Rep. Saine has with Charter Schools USA, which operates six schools in the state already, appears to be paying off—for both parties.

Seven days after Rep. Saine and other members of the non-profit board that will oversee the charter school they hope to open in 2018 submitted their charter school’s application to the state Office of Charter Schools, Saine’s campaign received a $3,000 check from Charter Schools USA CEO Jonathan Hage.

And three weeks after Hage’s campaign contribution, Rep. Saine’s campaign received another check—this time $4,000 from the McGuire Woods Federal PAC Fund. McGuire Woods is an influential lobbying firm that represents Charter Schools USA at the North Carolina legislature.

The timing of the campaign contributions, which comes right after the submission of an application that could award Charter Schools USA with a state contract worth millions, raises at a minimum the appearance of a “you scratch my back, I’ll scratch yours” arrangement where people take care of their own and, at the worst, a clear instance of pay-to-play politics.

Funds from charter school industry flow to NC campaigns while spending of taxpayer dollars lacks transparency

The lack of transparency around how Charter Schools USA (CSUSA) will be spending taxpayer-funded management fees worth millions raised the eyebrows of some members of the state’s charter oversight board during Rep. Saine’s presentation.

What would West Lake Preparatory Academy, a public charter school that plans to locate in Lincoln County and open in 2018, be getting in return for Charter Schools USA’s hefty management fee? It’s a figure that, as the school scales up to its planned maximum enrollment of 1,145 children in grades K-8, would reach about $1 million annually—tax dollars that CSUSA can spend away from the public’s eye.

After quickly rattling off some examples that left some CSAB members scratching their heads,  Rep. Saine said it boiled down to the following benefits.

“The level of expertise, the ongoing training, keeping up with…the new federal government and new dictates that come out,” Rep. Saine said. “We expect [CSUSA] to be the experts on those types of things because, quite frankly, our board is not qualified to do all of those things.”

And those sizable management fees don’t include the facility lease payments that West Lake Prep will have to pay CSUSA’s sister company, Red Apple Development, LLC. Red Apple will be responsible for constructing and leasing a building to West Lake Prep, and annual lease payments to be made by the school will start out at $1 million dollars and grow to $1.7 million by 2022, according to the school’s application.

Charter Schools USA, which was founded in Florida, has been a lucrative enterprise, operating dozens of schools in seven states and taking in hundreds of millions of dollars in state tax dollars. The for-profit enterprise has received a lot of attention for its real estate arm and the deals it negotiates to lease facilities to charter schools. An investigation into Charter Schools USA by the Florida League of Women Voters contends that too few tax dollars actually land inside the classrooms of Charter Schools USA’s charter schools, and instead are folded into the company’s profits by way of sizable management fees and facility lease payments—an allegation that CSUSA rejects.

Charter Schools USA has shown increased interest in North Carolina now that the state has lifted the cap on the number of charter schools that can operate here. Previously the limit was 100; lawmakers lifted that restriction in 2011 and now the state is home to nearly 170 charter schools that are public but are free of some of the rules and regulations that traditional public schools must abide. A locally elected school board does not oversee public charter schools.

Since 2014, CSUSA has opened six schools in North Carolina and, so far, has three more schools on deck for 2017 and 2018 openings.

To ensure continued access, CSUSA’s CEO—Jonathan Hage, who lives in Fort Lauderdale—has a track record of pouring his own personal money and funds from his companies into the political campaigns of charter-friendly lawmakers in Florida and beyond.

Hage and his wife, Sherry, have personally contributed $52,200 to North Carolina executive and legislative races since 2014, records show on the NC State Board of Elections website. Of those contributions, $20,400 has gone to Gov. Pat McCrory’s campaign and $15,300 went to the campaign of Lt. Gov. Dan Forest.

The next highest total? $5,500 to the campaign of Rep. Jason Saine—and Saine received $3,000 of that total on September 26, 2016, just seven days after he and his fellow board members submitted to the state their application for Charter Schools USA-backed West Lake Preparatory Academy.

Colleen Reynolds, a spokeswoman for Hage, said the Charter Schools USA exec gave money to many other political candidates around the same time.

“Mr. Hage has a long history of contributing to political candidates who support education reform. He contributed to numerous other candidates across the country who support school choice during that same time frame. Representative Saine clearly has the best interests of students in mind and we fully support his dedication to providing the families of North Carolina quality educational options,” Reynolds said in an emailed statement.

Three weeks after Hage’s contribution, Rep. Saine received another contribution on October 17 in the amount of $4,000 from the McGuire Woods Federal PAC Fund. McGuire Woods lobbies the state legislature on behalf of Charter Schools USA.

Repeated efforts to reach Rep. Saine have been unsuccessful.

The timing of the campaign contributions presents the appearance of quid pro quo — one man gets a campaign contribution, another gets a state contract that is ultimately worth millions of dollars over time. That’s the kind of activity that has inspired so much distrust of politicians, said Jane Pinsky, director of the North Carolina Coalition for Lobbying and Government Reform.

“While it may not violate the letter of the law, this activity clearly violates the law’s spirit and it’s why people don’t trust elected officials,” Pinsky said.

Former state representative and executive director of the North Carolina Justice Center* Rick Glazier says that the timing and specificity of what has transpired between Charter Schools USA and Rep. Saine is the real issue here.

“It’s the temporal proximity of the contribution to legislative activity that casts a shadow on the legitimacy and independence of that activity,” said Glazier. “This is different because it’s not an instance of filing a bill or seeking an action on behalf of an entire industry or very large group. Instead, you have a very specific group receiving an emolument timed very close to a donation to a campaign.”

“It’s not illegal, but the action and corresponding appearance breaks the spirit of the ethics code, which is to prohibit the acts or appearance of impropriety or bias,” Glazier said.

Concerns persist over vetting process for some charter oversight board members

Typically a group of people who sit on a nonprofit board created to open and oversee a charter school takes many months to put together a strong application to submit to the state.

But based on comments made to the charter oversight board last week, Rep. Saine as well as former Lincoln County commissioner Tom Anderson, Preston Curtis [the son of state Sen. David Curtis], and three other board members assembled their school’s application in a matter of weeks. The deadline to submit the application for West Lake Preparatory Academy was September 19, 2016 and, Rep. Saine said, the group began talks about opening a charter school in August.

The nonprofit board’s president, Aaron Hoegle, is a local community member and retail sales director with two children who did not win the admissions lottery for nearby Lincoln Charter School. It was then, said Hoegle, that Rep. Saine “invited him” to participate in the process of opening a new charter school.

Some CSAB members were impressed and others concerned with how quickly the non-profit board whipped up an application for a new charter school.

But the biggest flash point during the review of West Lake Prep’s interview last week came down to two issues that routinely arise and, consequently, result in division on the Charter School Advisory Board: a willingness to give the board a pass even if they don’t have a firm grasp on how they plan to execute their charter school’s education plan, and a failure on school leaders’ parts to adequately ensure that low-income and at-risk students have a fair shot at enrolling at a charter school.

“We are saying that an EMO [in this case, Charter Schools USA] can meet with a nonprofit board a few weeks from the deadline, throw something together they’ve pretty much thrown before, couple tweaks here and there, and you produce a board that is diverse in profession but not diverse in terms of race,” said Eric Sanchez, a CSAB member and head of Henderson Collegiate, a high poverty charter school where students are performing at an exceptionally high academic level.

Sanchez also criticized West Lake Prep’s leaders for a transportation plan that relies on the bulk of their students finding their own way to school, only budgeting for one school bus for 660 students in the first year. Charter schools are public, but the law says they do not have to provide transportation or access to the federal free and reduced lunch program for students.

“It really is about who you want to enroll. Who you actually pursue aggressively. So I completely disagree with the reactive approach, it’s completely proactive in terms of how your student body is made up,” said Sanchez. In a nutshell: if you don’t provide adequate transportation and access to free and reduced lunch, low-income families won’t enroll their children.

And finally, Sanchez assailed school leaders’ lack of familiarity with how to execute their proposed education plan—and some CSAB members’ decisions to look the other way.

“You don’t have to know your stuff inside and out, just come with your basic charisma, and we’re gonna give you a charter,” said Sanchez. “I find that offensive as a leader in this movement and I also think it perpetuates this idea of these segregated charter schools that has actually been spoken about for the last two years.”

“I’m concerned about the process and I’m concerned about what the enrollment in these schools is looking like,” added Sanchez.

In the end, it was a divided vote when the CSAB decided to move West Lake Preparatory Academy’s application forward to the State Board of Education for final approval—which, if history is any indicator, is a scenario that could give the State Board pause when they decide whether or not to give the green light to a charter school that didn’t have full backing from charter school advocates considering their pitch.

The State Board of Education will take up the Charter Schools USA-backed West Lake Preparatory Academy early next year.

*Fletcher Foundation provides financial support to the North Carolina Justice Center.

Featured image: Charter Schools USA CEO Jonathan Hage (right, blue tie) visits Cardinal Charter Academy (a CSUSA-operated school) with Gov. Pat McCrory in 2015. Photo credit: Lindsay Wagner

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