Saturday, November 26, 2005

Article: Board sues to close own charter school

By Kimball Perry and Randy Ludlow, Post staff reporters
Publication date: 03-26-02

The board of directors of a charter school sued to close it Monday, saying the company running the SABIS International School of Cincinnati is too concerned with turning a profit and has made the school financially insolvent.

It filed the suit Monday in Hamilton County Commons Pleas Court, saying it was untrained and duped when it signed the contract with a for-profit affiliate of SABIS Educational Inc., Cincinnati Education Management, to operate the school.

The Mount Auburn school, which has 658 kindergarten through sixth-grade students and largely is funded by $3.5 million in state tax dollars, is open for classes, said Derrick Shelton, director of the school.

He was unaware of the lawsuit.

''Cincinnati Education Management used its superior bargaining position, knowledge and resources to obtain a charter from the Ohio Department of Education through a non-profit corporation that was established merely as a pass-through entity for the benefit of the for-profit SABIS enterprise system,'' the suit notes.

The board said based on its liabili ties to Cincinnati Education Management - as well as the siphoning of all excess revenue - the school can't protect itself from creditors and ''should be judicially dissolved,'' noted a March 23 affidavit by Board Secretary Inyeai Ororokuma.

''The management company appeared to be using the school to make huge profits,'' minutes from a Nov. 12, 2001, special meeting of the school's board added.

It was at that meeting the board unanimously voted to give six-month notice to end its agreement with the management company, believing it was unfairly holding more power over the school than was the board.

''On numerous occasions, the board has requested information or documentation from (Cincinnati Education Management) and has had no cooperation,'' board president Tracey Lowe wrote in a Dec. 6, 2001, letter to the SABIS Educational Systems.

''In fact, (Cincinnati Education Management) has made it clear to the Board that, because of the terms of the agreement, the Board is not entitled to ask (Cincinnati Education Management) for even minimal cooperation.''

None of those involved in the suit could be reached for comment Monday and did not return telephone calls today.

The board is and was at a disadvantage in dealing with Cincinnati Education Management, legal documents allege, because it is affiliated with the company that owns the former Taft Elementary School and collects an annual rent of $1 million.

Board members have contacted the IRS about the legalities of that landlord-tenant relationship. They also are asking why they can't get any explanations from the management company about how it is spending the proceeds from a $600,000 promissory note taken out by the school.

The board's termination notice to Cincinnati Education Management started in-fighting among the board, the school and parents that has escalated, the suit notes, to board members fearing for their safety and being told they can't enter the school.

''On various occasions,'' the suit notes, ''the board members were barred from entering the School on official board business by employees of (Cincinnati Education Management) and/or threatened by employees of (Cincinnati Education Management) with forceful expulsion from the school by police, even though board members had a right to be on the premises.''

Because the school is financed primarily by a $3.5 million grant from the Ohio Department of Education, the board sued the school, the Ohio attorney general, the Ohio Department of Education and the Ohio auditor.

The suit seeks to dissolve the school and asks the state auditor to appoint a receiver to conclude the school's financial operations.

Steve Burgana, executive director of the Ohio Department of Education Office of Community Schools, said he was unaware of the lawsuit. The State Board of Education granted the state charter to SABIS.

''We've tried to promote resolution of the issues'' between the board and management company, ''but we have no authority to step in and take over operation of the school,'' he said. ''Our concern is for the welfare of the students. We have no knowledge of any of the allegations in the lawsuit. We are unaware of any financial problems.''

Tom Mooney, a Cincinnatian and president of the Ohio Federation of Teachers, said the lawsuit's claims support the group's lawsuit seeking to reform how for-profit charter schools are operated.

''Assuming these allegations are close to being valid, we're seeing the same kind of operation where a private company created its own little board to simply turn over the money. But, this board apparently has some integrity,'' he said. ''It's one more instance of for-profit companies controlling the school for their own benefit rather than for the benefit of kids,'' Mooney said.

A SABIS-managed charter school in Springfield, Mass., came under fire from that state's inspector general in 2000 for charging $950,000 in ''excessive'' management fees and receiving $300,000 for ''undocumented'' corporate support.

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