A downside of charter school management organizations

This blog has discussed both the upside and downside of management companies. There are some things that can be good about management companies, if they are run well and have a solid replicable program.

However, some families in Las Vegas have found some issues with management companies running charter schools. In this case, two issues exist. The parents have found that Imagine Schools is not as flexible regarding parent demands as they may have been led to believe. The other is that Imagine is not as willing to share in budget cuts as they might have imagined.

In most charter schools not run by management companies, some of the first areas to be cut are the administrative positions, not the classrooms. However, Imagine (and from what I hear currently and what I've seen in the past of other management companies) doesn't plan to cut it's own share of the budget. Now to be fair, since most management companies charge a percentage of revenue, they do take a hit when budgets are reduced. However, because their charges are fixed in a contract, it's difficult to make them participate any further in budget reductions unless they choose to.

This brings up the awkward place local boards find themselves in when dealing with management companies. When things are running smoothly, no one really notices. When things turn bad, local boards realize that they don't have as much control as they'd like. Usually contracts are multiple year. The school has the management company's name over the door. The school sends most of its money to the management company. The school uses the management company's curriculum. The school usually has taken some kind of a start up loan from the management company as well. All of these factors that seemed so attractive when the school started turn out to be a hindrance to change if the local board isn't satisfied for financial or academic reasons.

So, then whose responsibility is it to make needed changes? The management company will argue that it's the local board's, but the local board's hands are tied by the contract. Some companies will renegotiate some terms or extend loan payment, but at a price.

The question is what role is the management company really playing? If it is merely the management company under contract with the local board, then should it have its name on the building? Doesn't having your name on the sign imply more than just a contractual relationship?

Local boards often look for help in these situations from the management company who recruited them in the first place. The management company is under no contractual obligation to adjust their fees or their behavior.

The authorizers to this point don't seem to care unless something catastrophic happens.

While recognizing the benefits that a good management company can bring, I wonder why management companies aren't forced, by law, to engage in contracts that leave them open to some risk when budget cuts happen. If they participate and profit from the good times, then they should have to be engaged in helping out in the bad times.

It's not clear yet how many situations like the one in Las Vegas exist, but with budget cuts to K-12 education in almost all states, it is inevitable that others will need to resolve these same issues.