3/28/08

Columbus Dispatch

Jennifer Smith Richards

More than two dozen schools run by Ohio’s largest charter-school operator have illegally claimed tax-free status, a teachers union alleges.

More charter schools run by other for-profit operators probably shouldn’t be considered nonprofit organizations, the Ohio Federation of Teachers contended yesterday in announcing that it had asked the IRS to examine whether White Hat Management schools should pay taxes.

Akron-based White Hat operates 34 Ohio schools that received about $85 million in state per-pupil aid in the previous school year. That is why the federation targeted White Hat, said union President Sue Taylor. The union has been critical of charter schools and has questioned White Hat’s practices before.

The union contends that some of White Hat’s schools — Life Skills Centers for dropouts and HOPE academies — should pay taxes because the for-profit White Hat is too involved in their day-to-day business. The company regularly takes as much as 97 percent of the schools’ state funding for its services.

White Hat uses a “whole school” management style, in which it provides teachers, curriculum, supplies, bookkeeping services and often buildings. Charter schools, which are privately run but publicly funded, can’t turn a profit in Ohio. But they can hire for-profit companies to run them.

“These are all abuses of Ohio taxpayer dollars,” Taylor said. “The charter-school movement has been a disaster for our students.

“It’s a loose system of anything goes.”

Ohio’s teachers unions have lobbied against charter schools because when students leave a public school for a charter school, state funding follows them. Also, charter schools aren’t required to hire union teachers.

White Hat called the union’s allegations a publicity stunt.

“All of the points mentioned by the Ohio Federation of Teachers have been raised and addressed before. This is not news. We can only conclude that the Ohio Federation of Teachers is seeking publicity,” said a written statement released by White Hat’s public-relations firm.

White Hat lists 20 Life Skills schools, which serve high-school dropouts, in Ohio and an additional 17 in other states. Two are in Columbus.

Thirteen Hope academies operate in the state; nine are in Cleveland. The company also operates a large virtual school: the Ohio Distance and Electronic Learning Academy.

Taylor said that school boards in White Hat-operated charters lack power — White Hat uses a similar contract for each of its schools, and boards don’t have flexibility to negotiate their own — and that the same members serve on as many as 19 boards.

The union says each of those practices violates IRS rules that say that nonprofit charter schools must operate independently of a for-profit management company and that a for-profit group can’t benefit from the tax-free public schools it runs.

“That’s not local management. This is a travesty,” Taylor said.

Union attorney Don Mooney said the IRS might not respond for as long as a year.

White Hat says the IRS is aware of its practices, and the union’s allegations are baseless.

“The Ohio Federation of Teachers is not the arbiter of justice in this matter; and it is not unbiased,” said White Hat’s statement.