TribBlog: Imagine the Controversy

State Board of Education meetings are a little like Austin City Limits — know where to look and there's sure to be entertainment. At this week's gathering, the most bizarre and controversial scenes won't be in the full meetings, but unexpectedly in the Committee on School Initiatives where two Imagine International charters will make their case to receive charter contracts.

The company has a history of contentious school management and questionable non-profit status — the charter school community's nightmare. As both state and federal policymakers push for more charter schools, the Imagine case stands in stark contrast to success stories like KIPP Academy, YES Prep and Harmony School of Excellence.

The state board granted Imagine International Academy of North Texas a charter for a school in McKinney in 2008 despite the fact that Imagine did not hold non-profit status. Imagine representatives told the board they would use the nonprofit status of an affiliated charter school... in Indiana. This week, the company will have a chance to defend itself.

But is it actually out to make money?

Matthew Haag at The Dallas Morning News followed the strange story and explained the general business plan:

"Typically, after an Imagine-managed charter school gets approval to open, Schoolhouse Finance, Imagine's real estate arm, purchases a campus and charges the school rent. After the school begins to pay that rent, Schoolhouse sells the campus to a real estate investment trust, which then leases it back to Schoolhouse."

Imagine has become a major business force, with several dozen schools in 12 states — but the states aren't what you'd call happy customers. Newspapers in North Las Vegas, St. Louis and Fort Wayne all report various complaints about the system. According to its annual report, Imagine hopes to expand into South Carolina, California and Texas in 2010.

In the case of Nevada, the schools reportedly spent so much on rent that they struggled to pay for textbooks. In Fort Wayne, the Journal-Gazette reports that local control was effectively ignored by Imagine Schools, Inc.

Haag quoted Barry White, the company's chief financial officer, saying the company's real estate deals are "transparent" and the company's interest is in offering quality education.

According to Haag's research, the schools spend up to 40 percent of their state allotment — money per pupil that comes from the state — to pay for real estate. Two principals, one in North Las Vegas and one in Fort Wayne, claim they were fired for asking too many questions about rent. The schools all contract with Imagine Schools, Inc., a company based in Virginia, for operations. In Florida, several schools failed to open after local and state leaders complained about the out-of-state management.

In Texas, when the state board offered Imagine its charter, it wasn't without strings. The would-be schools have to conform to a list of requirements, which includes proving its nonprofit status. Since then, four of its five board members have quit, saying the company wants to run the schools and doesn't have regard for local control. 

Thursday, Imagine will make its presentation to the board, as they also propose another school in Georgetown.

"They’re still working out some of their contingencies," said SBOE Chair Gail Lowe, who said she was eager to hear their side of things.

It should be a show worth watching.