That’s Right Nate

Dennis Bakke is on top of the education world.   As the CEO of Imagine Schools, he oversees the fastest growing brand name in the education business with over 36,000 students at 74 schools in 12 states and the District of Columbia.   He is rightfully heralded as one of the leaders of the education reform movement.   The Washington Post lauded Mr. Bakke and his wife Eileen for winning a lawsuit to force Maryland to increase their funding for charter schools by over 60%.   Jason Botel, who directs KIPP charter schools in Baltimore, is one educator who knows what the Bakkes have accomplished. “Their funding of advocacy efforts has helped make sure that . . . charter schools like ours can provide a great education for children in Maryland,” he said.

Bakke has done quite well for himself and for other charter operators.  In fact, last year he donated $20,000 to Republican politicians in his own name.   He’s a member of The Family, a Christian organization that was recently in the news following several sex scandals.  What does Bakke owe his success too?  He sums up his philosophy in two words, “have fun”, which is a philosophy that has served Bakke well over the years.   In fact,  he wrote a book on it called “Joy at Work” which was a very successful publication.   The Bakkes say parents are attracted to their schools in part because of the emphasis on character. “We talk to the kids from Day One,” Eileen Bakke said. “What does it mean to be responsible? What does it mean to have integrity?”

One trick that Imagine Education has used was just revealed in the Saint Louis Post Dispatch in the form of a leaked email from Bakke to his top executives at Imagine Schools.  The email explains several tricks for picking the executive boards of Imagine Charter Schools carefully to avoid board members who feel, “ownership of the school. Many honestly believe it is their school and that the school will not go well without them steering the school toward “excellence”. They believe they are the “governing” Board even if that adjective to describe the board has never been used by an Imagine School person.”

The board members probably get this idea from local laws that usually require local residents govern the charter school.  There is an excellent article in the November 1st Fort Wayne Journal Gazette that shows how the entire charter process was manipulated by Bakke and Imagination Schools in opening up 4 chart schools in Fort Wayne Indiana.  The paper concluded that the advisory board makes no decisions and gives no advice, “Not the $87,510 a year to operate school buses. Not $114,871 to run a lunch program. Not which teachers are hired or whether to hold summer school, or even whether to borrow more than $1 million for operations.”

So how much money is Imagination Schools making on the for profit education game?  In Indiana the local contract required the schools there to give the parent company 12 cents on every tax  dollar they took in.   This seems to be a fairly standard contract for the company.   If they have 36,000 students and states are giving them on average about $6,000 per student simple math comes out to about $26 million tax free.   That’s good, but let’s face it you can barely pay the salary of one power hitting third baseman for that.    Fortunately, you can’t beat real estate for generating profits.

The Dallas News explained how Imagine’s real estate works.   The real estate arm of Imagine Schools is called Schoolhouse Finance:

In Nevada, the state awarded 100 Academy of Excellence in North Las Vegas a charter, and the school hired Imagine to run its educational services. Schoolhouse Finance, the Imagine subsidiary, paid for the school’s property and building construction. Schoolhouse Finance then leased the property to the charter school for $1.4 million a year.

Next, Schoolhouse Finance sold the $8 million property to a real estate investment trust, Kansas City, Mo.,-based Entertainment Properties Trust. The trust then leased the property back to Schoolhouse Finance at a lower rate than the charter school pays.

Money remaining after Schoolhouse Finance pays its lease to the trust goes to Imagine Schools Inc. This tiered lease system has led to 10 percent returns on investment for owners and investors in the two companies.

A principal in Indiana and another one in Las Vegas were fired after complaining to Imagine about rent that cost them approximately 40% of their operating budget.   Most charters pay 10-15% of their operating budget for rent if they don’t own the property outright.  This leaves the schools with very little money for things like books and teachers.    From May of 2008 until November of this year, Imagine went from 51 to 74 schools.   Yet, this year the teachers at the Imagine Charter School in Weston, FA were hit with pay cuts of up to 22 percent.

OK, I had to do another serious education story and yeah, it’s kind of dry with all the money talk.   Sometimes, outrage does overtake my desire for satire.   The point here is that in the world of for profit education, expanding is everything.   Whether you’re talking about KIPP, UNO, or any of the other charter school groups with multiple schools you have to follow the money.   Tax dollars that should be going to the children of this country, in too many cases are going to companies like this.   Is this really reform?  Is opening up more schools like this really a race to the top?