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How a Washington County charter school failed at every step, and was approved anyway

Josh Moon

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Woodland Prep is a charter school horror story — and it hasn’t even been built yet.

Located in rural Washington County, Woodland Prep, which will open as a K-7 school this fall and add a grade level each year, is everything state leaders assured us could never happen under Alabama’s charter school laws.

Its land is owned by a shady Utah holding company. Its building is owned by a for-profit Arizona company. It will be managed by a for-profit Texas company that doesn’t employ a single Alabamian. It will pay the head of that management company around $300,000 per year — up front. Its application was rejected by the National Association of Charter School Authorizers, which Alabama pays a hefty sum to review and approve charter applications. Woodland’s management plan failed to meet basic standards for approval in any of the three plan areas reviewed by NACSA.

Woodland also is not welcome in Washington County, where residents turned up at a 10-1 ratio to speak out against it last year during community meetings. And maybe most importantly, the school is not needed in the poverty-stricken county, where not a single school is failing, most exceed state averages and students are free to attend any school in the county they wish.

“We never thought this school would be approved,” said Betty Brackin, an employee of the Washington County school system and an outspoken opponent of Woodland. “Before we knew any of the things about who was running it or all of that, we knew that only a small number of people in this county — people who were upset for personal reasons … with the public school system — they’re the only ones who wanted it. The rest of this county is not for this, and we’ve let everyone know it.”

But Woodland was approved by the Alabama Charter School Commission, which appeared to violate at least three of its responsibilities in doing so.

The Commission ignored the community outcry against Woodland and failed to even discuss the need — or lack thereof — for a charter school in the county. Both of those are specific requirements within Alabama’s charter school law for the Commission to consider during its public meetings.

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Additionally, charter schools approved in Alabama are, according to Alabama’s law, required to meet “national standards.” To assure those standards are met, Alabama lawmakers assured a concerned public that a “top-notch” national body — to quote two state representatives — would be contracted to review every application before those applications would be considered by the Commission. NACSA is that group, and Alabama pays it nearly $100,000 per year to review applications, and then the Commission ignores its advice.

Woodland Prep’s was at least the third charter application that NACSA rejected for very specific, very detailed reasons. For example, in questioning Woodland’s operational plan, the NACSA reviewers had concerns about its hiring of Unity School Services to perform management and education services. It was unclear why USS was selected, if the company — which had just eight total employees, none of which were in Alabama — could even do the job, and what expertise it had in such areas.

NACSA also noted that Woodland’s education plan included very few details, especially for a school scheduled to open the next school year, and had failed to identify key partnerships or assign key roles.

Commission Failings

None of that mattered to the Commission, though. It approved Woodland’s application, and from what I can tell, the application was never reviewed by any other outside entity. (Other charter applications rejected by NACSA and later approved by the Commission were at least approved by a different entity.)

I asked the Alabama State Department of Education, which has oversight responsibilities of the Charter School Commission, to explain why the application was approved after being rejected by NACSA and/or to provide me with an approval of an amended application by NACSA or another group. There was no response.

ALSDE did, however, respond to several other questions I submitted concerning the troubling details of Woodland Prep’s ownership and management, the lack of community support for the school and about specific details — such as lease rates and interest rates — contained in agreements between Woodland’s board and the private companies it had contracted with.

ALSDE is supposed to maintain records, such as building plans and lease agreements, that charter schools enter into. That is because, as the authorizer of the charter school in Washington County, the Commission is responsible under Alabama law for the oversight of that school.  

But in response to my questions, ALSDE decided to be flippant. It directed questions about community opposition to “commissioners who attended the meetings,” despite the fact that ALSDE video recorded each meeting. It disputed that the Commission has a responsibility to monitor and oversee the charter schools it approves, stating that “the Commission may monitor …” the schools. And finally, when asked about the out-of-state ownership and management of Woodland, ALSDE said those questions should be directed to one of those out-of-state groups.

Which seems to indicate that there is no oversight whatsoever of charter schools — or the process to approve charter schools — in Alabama.

The Gulen Connection

A month ago, I had never heard of Woodland Prep, or of the uproar that has taken place in Washington County over its approval. But the day after I wrote a story about Montgomery’s LEAD Academy — which the Commission also approved despite a rejected application, questionable ownership and a shady management company — six different emails landed in my email inbox from Washington County residents.

All of the emails, including two from teachers, one from a dentist, another from a doctor and one from Brackin, the school system employee I mentioned earlier, had the same general theme: “Please help expose what’s happening in Washington County.” That was the actual subject line of one of the emails.

It seems that one name in my story about LEAD had caught their attention: Soner Tarim. Tarim is the CEO of Unity School Services and was the founder of Harmony Schools, a mostly-successful charter school group in Texas. Tarim and Harmony also have their very serious problems, not least of which is their ties to a Muslim cleric and controversial preacher from Turkey, Fetullah Gulen, and his Gulen Movement.

Numerous reports from the New York Times to Reuters and other local news outlets linked Harmony and Tarim to Gulen, and some labeled Harmony a financial front for Gulen’s movement. While Gulen espouses a more moderate brand of Islam, his movement has been labeled a terrorist organization by Turkey, which has accused Gulen and his followers of attempting to overthrow the Turkish government. Others dispute those claims, and believe the terrorist label is unfairly applied to Gulen, who has shown no proclivity for violence.

Regardless, other legal questions have been raised about Harmony and Tarim’s use of the schools to exploit a visa program and to skirt hiring laws in order to give contract jobs to Turkish workers and teachers.

There have also been other, education-related problems, such as a massive grade-change scandal at Harmony in Texas and financial fraud allegations related to grants at other Gulen schools.

But in Washington County, while there was concern about Tarim’s past and his connections to Gulen, the much bigger question was a simple one: Why is he here?

“No one could figure out why someone from Texas would come to little ol’ Washington County for a charter school,” said Brackin, who is the federal programs coordinator for the system.

The answer was easy and expected: Money.

A copy of the USS contract with the Woodland Prep board shows that Tarim will make 15 percent of all federal, state and local funds received by Woodland. Which means that for every student allotment — and Woodland estimates in its application that the per-pupil allotment will be more than $8,200 — Tarim will make 15 percent off the top. If Woodland’s projected enrollment of 260 students is accurate, Tarim will make more than $300,000.

“He’ll be the highest paid man in Washington County,” wrote one county official who asked not to be identified.

But there’s more. Under the terms of his contract, he also is allowed to keep all profits from any school programs, such as pre-K or after-school trainings, and he is free to use Woodland Prep to apply for any grants.

An Ownership Mystery

Brackin has served as a sort of investigative reporter when it comes to Woodland Prep — gathering public documents, attending meetings and taking meticulous notes, demanding contracts that should be public and reporting it all on social media. She provided me with a trove of documents, and it was the land deed and lease contract that first drew me in.

According to the deed for the land, Woodland Prep’s local school board, Washington County Students First, isn’t the owner of the land. Instead, a holding company — Woodland Charter Holdings — in Utah holds the deed. That company has one registered agent — Jennifer Lind of Utah. According to online records, Lind is the agent of record for at least two dozen charter holding companies in Utah — most of them tied to charter schools thousands of miles away from Utah.

According to records kept by the State of Utah, Woodland Charter Holdings also has just one registered executive: American Charter Development. The same company contracted with the charter board to finance and build the Woodland school building.

So, why all of the layers of ownership? Judging by similar ownership of other charter schools, it’s to mitigate risk to the company financing the project and to allow for the easy sale or transfer of ownership of the land, school building or all of the assets.

Forming a holding company in Utah, where banking laws are particularly lenient, allows for the investors — American Charter Development, in this case — to set up a financial buffer between it and the debt incurred by Woodland Prep. If the school goes broke and has to close, it’s the holding company left on the hook, not ACD.

That means that ACD has relinquished its ownership of the Woodland Prep school to a holding company that ACD owns, and now ACD will charge itself rent and interest — paid for by the tax dollars that were once flowing into Washington County schools.

And make no mistake, ACD is rolling in the cash — receiving 6 percent of the “total development costs” in monthly lease payments, according to the heavily redacted contract it signed with Woodland Prep’s board. That fee does not include a guaranteed 8.9 percent capitalization rate that ACD is guaranteed.

There are also guaranteed increases in the ACD contract terms, which assure that the company will receive 2-percent increases each year after the second year. The contract is for 20 years, but Woodland Prep’s board has the right to purchase the building and land for 117 percent of the total construction costs once every five years.

All of those payments, including the 15 percent to Tarim, will be made using public tax dollars, diverted from the classrooms in Washington County and into the coffers of for-profit businesses. (By the way, I also brought up the issue of the redacted contract between ACD and the Woodland Prep board. ALSDE said it was a matter I should take up with ACD.)

Follow the Money

The contracts to build and finance charter schools are worth millions. States with similarly lax laws governing charter schools’ start-up and management have been inundated with shady, corner-cutting building and finance operations that have sucked millions from local school systems and turned their owners and investors into millionaires. The results for students and communities, however, have been anything but stellar, with the overwhelming majority of charter schools performing no better than the traditional public schools they replace and often faring much, much worse.  

Other charter schools for which Lind is a registered agent and which set up holding companies in Utah have experienced all levels of fraud and greed — from schools failing to purchase textbooks and employ an adequate number of teachers to school buildings and property being sold multiple times and investors fleeing in the night as the schools close their doors.

In Missouri, for example, the Imagine Schools charter system — which also set up a Utah holding company — had the worst test scores of any system in the state. Its classrooms lacked basic learning materials, according to a review reported by the St. Louis Post-Dispatch. And several of the school buildings had changed owners multiple times in less than a year. But Imagine and its real estate investors made millions in profits, all of it coming from tax dollars.

Obviously, such an outcome can’t be predicted for Woodland Prep. But the process by which Woodland was approved and its start-up monitored by ALSDE and the Commission raises serious concerns.

And with millions of dollars at stake in an already cash-strapped state education system, shouldn’t someone be watching more closely?

 

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