by David Safier
NOTE: This is the ninth in a series of recent posts examining Imagine Schools. (Here are 1, 2, 3, 4, 5, 6, 7 and 8) If you have ideas or information to add, please leave comments at the end of the post or email me at email@example.com. I keep all email correspondence confidential.
We may be watching the slow crumbling of the Imagine Schools empire due to a combination of bad education and shoddy finances. St. Louis is the place to look for the early signs of decay.
The Missouri Board of Education closed 6 Imagine schools in June. The schools' test scores were abysmal -- worse than St. Louis School District schools, which aren't known for high student achievement. Also, the Missouri BOE decided Imagine Schools' financial arrangements were unsustainable.
That means 6 schools Imagine Schools built were closed. The schools paid a combined yearly rent of $6.7 million. However, since Imagine Schools had already sold 5 of the 6 schools to a separate company, Entertainment Properties, you'd think Imagine would only have a financial stake in the one building it still owned. But that's apparently not the way it works. Entertainment Properties told its shareholders (who have been asking why it made such lousy real estate investments) that Imagine is responsible for paying the rent whether or not the buildings are occupied.
Of course, Imagine Schools would be off the hook if EP could find renters for the buildings -- if EP could get the same rent for them, that is.
Today we learn the St. Louis Public Schools, which has to absorb all the students from the defunct Imagine Schools, is renting 1 of the 6 Imagine buildings to take care of some of the students, but it's only paying one-third of what Imagine was paying: $688,500 rather than last year's $2.4 million.
Imagine Schools is notorious for charging its schools more rent than any other Charter Management Corporation. The St. Louis deal makes it clear, no one else would pay nearly that amount for the same building. That means someone is going to take a hit for any building Imagine leaves, whether it stays empty or is rented to someone else. And it looks like Imagine Schools, not Entertainment Properties, will take the hit.
Will other cities be willing to grant charters to Imagine Schools based on its well-publicized record of low achievement and untenable financial arrangements? Probably not. Will some other Imagine Schools, many of which are in trouble academically, financially or both, close over the next few years? Probably so. It looks to me like failure will feed on failure until Imagine CEO Dennis Bakke cuts his losses and pulls the plug.