Politics & Government

NC charter school that would pay millions to an Arizona businessman gets state backing

A new 2,000-student charter school in Wake County that could pay $5 million a year to companies owned by an Arizona charter school operator got the green light Monday from a state advisory board.

The N.C. Charter Schools Advisory Board recommended that state approval be given to Wake Preparatory Academy, a K-12 charter school that wants to open in Wake Forest in 2020. It would be the first charter school in North Carolina for Glenn Way, an Arizona businessman who has made millions of dollars building, selling and leasing properties to the charter schools he runs.

Members of the charter advisory board emphasized how Wake Prep will benefit from working with companies who can build the facility and manage the day-to-day operations. Way owns both Charter One, the education management organization that will run the school, and Schoolhouse Development, the company that will build the facility and lease it back to the school.

“I think Charter One is going to be a good fit for North Carolina,” said CSAB member Alan Hawkes. “ We need an (education management organization) with integrity, with an academic performance track record, an EMO with deep pockets. This fits Charter One.”

The recommendation goes to the State Board of Education. Of the 35 charter applications submitted in October, CSAB has recommended 15 for approval, including five new charter schools in Wake County.

Charter school growth is far exceeding enrollment growth in the Wake County school system. Wake school officials say $7 million of the $48.9 million local funding increase that’s been proposed this year is to pass along money to charter schools.

Charter schools are taxpayer funded schools that are exempt from some of the rules that traditional public schools must follow. Some charter schools are managed by for-profit companies.

But CSAB vice chairman Steven Walker pointed Monday to how traditional public schools also contract with for-profit companies for some services. In the case of Wake Prep, Walker said the local nonprofit board is contracting with Charter One because it thinks it’s the way to get the best bang for its buck.

“From a philosophical standpoint, we need to stop kidding ourselves and thinking that everybody that’s in education is just doing it out of the goodness of their heart and they’re ready to lose millions of dollars to do it,” Walker said. “People get paid for working at a school. People that provide services to a school, they get paid for those services.”

Charter One manages American Leadership Academy, a network of Arizona charter schools. Way, a former Utah state legislator, founded ALA and owns Charter One and Schoolhouse Development.

The Arizona Republic reported last year how Way had made as much as $37 million by setting up no-bid deals in which he built school campuses and then sold the properties at a profit to the ALA charter schools. The newspaper’s five-part investigation into charter schools earned it the prestigious George Polk Award for Education Reporting.

An image from the website for the planned Wake Preparatory Academy.

Under the proposed contract, Wake Prep will pay lease payments to Way’s company that will reach $3 million a year. Under another proposed contract, Wake Prep will pay Charter One a management fee of around $2 million a year, reaching $2.6 million in year three.

“It’s basically a $10 million grant, a loan that’s going to a management organization,” said CSAB chairman Alex Quigley. “If we think that’s great, great. I feel like we need to know what’s in that management fee.”

Both Quigley and Tammi Sutton voted against recommending approval for Wake Prep.

But Walker said the advisory board should be more concerned about what Wake Prep can do academically. He pointed to how Charter One says its charter schools in Arizona outperform nearby traditional public schools in that state.

“I don’t care if you take the whole amount if the kids get a great education,” Walker said. “That’s really what my number-one concern is.”

CSAB member Lindalyn Kakadelis said the people in Arizona’s charter school community that she contacted were highly complimentary of Charter One. She said this “would be a good EMO to come into North Carolina.”

Advisory board members praised how Wake Prep plans to provide school bus service and school meals, something not required of charter schools. School leaders also say they plan to request state permission to give admission priority for economically disadvantaged students.

Advisory board members appeared to be more concerned Monday with whether Wake Prep could reach its goal of opening with 1,600 students in 2020. It eventually projects to have 2,000 students a year. It would be one of the largest charter schools in the state.

Both Charter One and local leaders of Wake Prep pointed to factors such as the population growth in northern Wake County, the high demand at area charter schools and the hlgh level of interest generated from a marketing campaign. They expressed confidence that they’ll not only attract the students but also have a facility ready, unlike some new charter schools that have had to request delays due to not having a building ready on time.

“I have an amazing confidence in Glenn Way and his construction abilities to get the job done,” said Bill Guttery, chief operation officer of Charter One. “We have this team at Charter One that’s done it before, done it successfully and really has a proven track record of getting it done.”

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T. Keung Hui has covered K-12 education for the News & Observer since 1999, helping parents, students, school employees and the community understand the vital role education plays in North Carolina. His primary focus is Wake County, but he also covers statewide education issues.