For-profit charter schools could take hold in Tennessee

Tennessee State Capitol (Photograph: John Partipilo)
Tennessee State Capitol (Photograph: John Partipilo)

Nearly 20 years after nonprofit charter schools started in Tennessee, legislation enabling for-profit charter school managers to operate is moving through the Legislature despite concerns they could benefit from state funds while keeping financial aspects secret.

This proposal is being pushed by National Heritage Academies, a for-profit company owned by entrepreneur J.C. Huizenga, which has 96 schools in nine states with more than 60,000 students nationwide.

State Sen. Mike Bell, a Riceville Republican, passed Senate Bill 455 on a 6-3 vote in the Senate Education Committee Wednesday despite opposition from lawmakers such as Sen. Raumesh Akbari.

State Sen. Mike Bell, R-Cleveland (Photo: Tennessee General Assembly)
State Sen. Mike Bell, R-Riceville (Photo: Tennessee General Assembly)

“I am for expanding parental choice anywhere I can do it,” Bell said.

He contended for-profit management companies would invest profits back into their schools to improve them. 

Applicants would have to provide information to the state’s charter school commission detailing the names of schools they operate, their academic performance, accountability by nonprofit governing bodies, problems with non-compliance and the names of schools they had to close for poor performance, according to Bell. 

Akbari, a Memphis Democrat, said she has opposed every effort to allow for-profit charters in the state. She pointed out former House Speaker Beth Harwell “historically killed” those efforts in the House Calendar and Rules Committee, which was “pretty unheard of.”

“I just don’t think it’s a good move. Our charter schools are fine as nonprofit managers. I think they’re focused on the children, and I think this is a step in the wrong direction. I’m opposed to it strongly,” Akbari said.

Tennessee put about $11 million toward charter school facilities two years ago and is spending more than $20 million on charter facilities, as part of Gov. Bill Lee’s budget. 

One of the governor’s first initiatives was to create a commission to authorize charter schools and take some of the authority away from local school boards that reject charter applications. Under the new rules, charters can seek approval from the state commission if the local school board turns them down.

Under questioning from Akbari, a representative of National Heritage Academies told lawmakers all of her company’s schools have received clean audits. 

National Heritage Academies has made news for charging one school a rental rate that was a thousand times more than it should have been — $2.76f million annually.

However, the academies’ representative admitted the company declined to provide information to New York’s Office of the State Comptroller about how $10 million in annual public funding was used because the company didn’t feel comfortable releasing proprietary information. She contended the school, Brooklyn Excelsior Charter School, received a good audit on education-related funding.

Yet news reports also show the audit also found National Heritage Academies used an affiliate company to charge Brooklyn Excelsior $2.6 million annual rent, much higher than it should have paid.

At yet another school, Brooklyn Dreams Charter School in Kensington, rent was about a thousand times more than it should have been, as the company’s real estate firm rented the site for $264,000 a year and charged the school $2.76 million, according to a report.

Rep. David Hawk, a Greeneville Republican carrying the House version of the bill, confirmed the idea is to lift the prohibition on for-profit schools while putting in new measurements on performance for all charter schools. He expects to introduce the bill next week.

Hawk admitted questions are likely to be raised about the potential for for-profit charters to avoid financial aspects such as salaries of directors and board members.

“That’s why we’ve put the performance measurements in there, to say that regardless of who’s making how much money are the charter schools performing up to the way Tennessee expects them to perform,” Hawk said.

He pointed out, though, that for-profit charters have been discussed for about 20 years, since the General Assembly passed legislation allowing nonprofit charter schools to operate. Hawk expects a “challenge” in passing the legislation because numerous legislators opposed the concept of nonprofit charters, much less for-profit schools.

He was uncertain whether for-profit schools would be able to benefit from state funding.

Tennessee’s charter schools are a point of controversy mainly in Metro Nashville and Shelby County.

The state has overruled the Metro Nashville Board of Education’s decisions on charter schools it found were failing to meet requirements or were being located in affluent areas where they weren’t needed. In Memphis, about 40 charter schools are part of the Achievement School district, which has come under fire from some lawmakers for failing to move schools off the state’s Priority list for poor performance.