by David Safier
NOTE: Since Imagine School at Superstition made news by firing 11 of its 14 teachers, I've been writing about it, reading up on Imagine Schools and talking to people who know more than I do. This is the third in a series of posts trying to make sense of the nation's largest charter school corporation which has drawn more controversy for its practices and low student achievement scores than any other (Here are the first, second and third posts). What I write may be incomplete or incorrect in places. If you have information to add, please leave comments or email me at firstname.lastname@example.org. I keep all email correspondence confidential.
In 2011, Imagine Prep at Superstition had about 135 students. The Annual Financial Report it filed with the Arizona Department of Education lists its total expenses as $2,613,219, or $19,357 per student.
That doesn't make sense. Charter schools get about $7,000 per student from the state. Where did the other $12,357 per student come from, and where did it go? The answers to those questions raise a number of other questions about the way Imagine Schools are run and the honesty of their financial reporting.
As you can see in the graphic below taken from its 2011 Annual Financial Report, Imagine Prep at Superstition received $932,819 in revenues from the state in 2011. That comes to a little under $7,000 per student, which makes sense. But it also received $2,075,105 as "Other Revenue," which are itemized as "Contracted Revenue, Facilities, Gain."
(The graphic only shows the two items from the Revenue page. There are a number of smaller items. These two add up to more than the total listed expenses, meaning, according to the report, revenues exceeded expenses in 2011.)
What kind of revenue could a charter school generate that totals $2,075,105? The school offers no services-for-hire to others. Though a few district level administrators have their offices at the school, even if the school charges them rent, that can't amount to much. Could a large part of the non-state revenues be a "loan" from the Imagine Schools corporation? That's possible, since Imagine Schools loans money to individual schools whose expenses exceed revenue, and expects the loan to be paid back later. But "Contracted Revenue, Facilities and Gain" don't sound like terms you would use to describe a loan.
The next question is, where does that $20,000 per student go? It certainly isn't lavished on the students. Teachers at the school frequently bought supplies out of their own pockets, including copy paper when the school ran out toward the end of the year.
One answer is, $1,002,844 went toward "Operation and Maintenance of Plant," which is about $70,000 more than the entire state funding for the school. Add in $405,155 for School Administration and $140,680 for Central Services, and those three items come to $1,548,679, or $11,471 per student. The graphic below shows those items from the Expenses page of the financial report.
Imagine Schools is known nationwide for the exorbitant rents it charges its schools, sometimes as high as 40% of total expenses. But in this case, the rent is higher than the total allocation from the state. School Administration and Central Services expenses are also way out of proportion to the number of students attending the school.
Something looks very wrong here. Other Arizona charter schools don't list expenses totaling $20,000 per student. It seems inconceivable that a charter could somehow generate $2 million in revenue. And rent that's greater than the entire state allotment? None of it makes sense. Yet 2011 isn't unusual. The school's financial reports from other years are similar.
If there's a simple explanation, I hope someone who knows more than I do will explain it to me. And if there's more to this story than I know, I hope someone will let me know what kind of games Imagine Schools is playing.