A divided State Board of Education (SBE) rejected two of three accelerated charter school applications from operators who sought approval to open in August.

The board voted 6-5 to send the applications for American Leadership Academy-Monroe in Union County back to the Charter School Advisory Board (CSAB) for review and resubmission to the state board. Lt. Gov. Mark Robinson recused himself from the ALA-Monroe vote because his wife serves on the school’s board of directors.

The state board voted 7-5 to send the application for Legacy Classical Academy in Rockingham County back to CSAB. Meanwhile, the board unanimously approved the fast-track application for Mountain City Public Montessori in Buncombe County.

All three applications were approved by the charter board before being sent to to the state board.

Normally, it takes two years to approve a charter application. The fast-track provision allows schools to open in a year. Schools generally must have a proven track record of success, a school building and leadership in place before an accelerated application is approved.

State Board members opposed to fast-tracking the ALA-Monroe and Legacy Classical applications cited governance issues and concerns about the management fees the schools would pay for-profit Education Management Organizations (EMOs).

ALA-Monroe would pay Charter One, an Arizona-based management firm, a 15% management fee. The money would be taken off the top of state funding the school receives. Charter One manages more than two dozen schools in Arizona, North Carolina, South Carolina and Nevada. Six of the schools it manages are in North Carolina and include Wake Preparatory Academy, a large K-12 school located in Franklin County near the Wake County line.

Smaller, North Carolina-based American Traditional Academies would charge Legacy Classical a 14% management fee, State board vice Chairman Alan Duncan said. He added that a 14% fee would apply to federal monies as well. Legacy Classical would be the first school managed by the EMO.

Amy White

SBE member Amy White argued that if the board is going to take that kind of approach to charter school management contracts, then it must take the same approach to all contracts with NC Department of Public Instruction vendors.

“If that’s the thought moving forward, then that same scrutiny should be applied to every contract that comes before the Department of Public Instruction for the use of state and federal funds,” White said. “I think you will find very similar if not even larger margins built into a lot of those contracts.”

State Superintendent Catherine Truitt chimed in that contracts with the NCDPI’s higher education partners have profit margins of 15% and “sometimes higher.”

On Wednesday, during the board’s work session, SBE member Jill Camnitz shared her concerns about Charter One’s rapid expansion in North Carolina. Camnitz said the board is being asked to approve another school without knowing how students in Charter One-manage schools are performing academically. The pandemic interrupted state testing and led to lower test scores when testing resumed.

Alan Duncan

Comparing testing data with schools in Arizona isn’t helpful, Camnitz said, unless North Carolina uses the same school performance measurement rubric.

“Success in Arizona does not necessarily translate to similar success in North Carolina,” she said.

Camnitz also had concerns about the amount of control the management firm has compared to the school’s board of directors.

“It gives me pause about who’s really going to be in control of the school,” Camnitz. “I have real concerns about that.”

Duncan expressed concern that Charter One would have the authority to hire and fire staff under the management agreement. He said there also needs to be clarity about whether a management organization can take 15% of federal dollars from schools.

“I’m concerned about the inherent conflict that already exists; that is the ethical conflict of these dollars, how do we make the hard choice of whether we have these dollars go [to] the profit-making emo body or whether we allocate those [dollars] to children,” Duncan said.