NORTH CAROLINA — The Superintendent of Public Instruction maintained the power to appeal Charter School Review Board decisions under a 2023 law. That power was stripped away last week after the General Assembly overrode Gov. Roy Cooper’s veto of S.B. 382.
READ MORE: Charter schools receive nearly $500K in local endowment grants, NHCS didn’t apply
Like public schools, charter schools are primarily funded by state and local taxes but are largely independent of state regulations. The education model was authorized in North Carolina in 1996 to promote innovative teaching methods, fill gaps in traditional education, and enhance parents and students’ choices.
Statewide, charter schools have more than doubled to 211 since the state lifted its 100-school limit in 2011; the organizations received roughly $1 billion in state funding in 2023.
North Carolina Justice Center senior policy analyst Kris Nordstrom argued the recent passing of S.B. 382 would reduce diverse perspectives that could ensure charter school success and accountability.
“Is this going to be a new approach that is filling a hole we don’t have, something we can learn from?” he asked. “Instead, it’s really turned into a case where if they have their application in order and have a decent business plan then they tend to get approved.”
The State Board of Education was previously the body responsible for charter school approvals, until it changed with a 2023 law, H.B. 618, which gave the Charter School Review Board authority over charter school application approvals, renewals, and applications. Gov. Cooper described the bill then as a “legislative power grab,” much like he did S.B. 382, and said it would undermine charter school oversight.
The Charter School Review Board consists of 11 voting members; eight are appointed by the Senate President and House Speaker, two must be charter school advocates selected by the State Board of Education, and one is appointed by the Lieutenant Governor.
Ten of the board’s 11 voting members either work for charter schools, pro-charter school lobby groups, or charter school contractors.
Incoming Democratic superintendent Mo Green raised concerns regarding charter school oversight during his campaign. The incoming superintendent maintained that charter schools play an important role in the education system but expressed concerns they enable the diversion of funds from traditional public schools; a 2023 bill prohibited the consideration of charter school applications’ alleged impacts on local governments in board decisions.
A spokesperson for Green said he was unavailable for comment about education policy changes in S.B. 382.
Thomas Kelley, the director of UNC’s Community Development Law Clinic, told Port City Daily Tuesday he was concerned that nonprofit charter schools could be failing to serve as legitimate stewards of the public interest. Unlike traditional public schools, charter schools can be managed by for-profit “education management organizations.”
The law professor published a 2015 North Carolina Law Review study on the legality of nonprofit charter schools’ partnerships with for-profit educational management organizations. His review focused on North Carolina charter schools managed by for-profit education management firms Charter Schools USA, National Heritage Academies, and Roger Bacon Academy. He found the companies, which now cumulatively run 30 statewide charter schools, likely engaged in conflicts of interest, were inadequately transparent, and violated nonprofit law by allowing contractors to transfer public education funds into corporate profits.
“Under the terms of their lease arrangements with charter schools,” Kelley wrote, “both NHA and CSUSA engage in what appear to be highly lucrative real estate deals that permit them to obtain ownership of valuable properties using public funds and charge charter-holding nonprofits rent long after their acquisition-related debts are paid off.”
Charter School Review Board member Dave Machado is the North Carolina superintendent of Florida-based Charter Schools USA, which manages 87 schools, including at least 10 in North Carolina. The company’s CEO John Hage owns Red Apple Development LLC, which leases properties to CSUSA schools. CSUSA has spent $446,000 on lobbying in North Carolina since 2020 and Hage has donated $288,500 to state candidates.
Charter School Review Board member Hilda Parler is president of Wake Forest Charter Academy, which paid American Heritage Academies $5.4 million for management services last year. Parler is also community liaison for Arizona-based education management company Charter One, which manages 11 NC charter schools including Wilmington’s American Leadership Alliance Coastal. ALA Coastal spent $2.6 million on contractor services last year; it received $5.2 million in state appropriations and $2.5 million in county funds over the same period.
Roger Bacon Academy manages four Classical Charter Schools of America schools in Wilmington, Leland, Southport, and Whiteville. The firm came under public scrutiny a decade ago after a 2014 ProPublica investigation detailed controversies surrounding Baker Mitchell, founder of both the nonprofit charter school network and its contracted education management company.
Mark Dudeck, Roger Bacon Academy CFO and Classical Charter Schools treasurer, joined CCSA board chair Robert Spencer to form three business entities — Leland Charter LLC, Columbus Charter LLC, and Southport Campus Charter LLC — to finance the purchase of real estate and facilities used by the school in 2020. Leland Charter LLC purchased a 23.7-acre property from Coastal Habitat Conservancy LLC — a firm owned by Baker Mitchell — for $8.2 million in December 2020, according to Brunswick County property records.
Classical Charter Schools sold $40 million in public bonds in December 2020 to finance real estate purchases, future projects, and past debt. The nonprofit school network will pay more than twice the bond principal in interest fees; the schools entered a lease agreement with the three LLCs to rent facilities for a total of $81 million through 2055.
According to tax filings, Mitchell is Classical Charter Schools’ secretary. The nonprofit received $19.8 million in state funds and $6.3 million in county appropriations last year. It paid Mitchell’s firm $7.1 million for management fees, staff development, and administrative support.
Mitchell is a former member of the Charter School Advisory Board and has advocated for greater board authority over charter school policy. He has given $179,400 in campaign donations, including $5,200 to Senate President Phil Berger, $2,000 to House Speaker Tim Moore, and a $25,000 contribution to the Republican Council of State committee in July.
Moore and Berger filed a brief in support of Classical Charter Schools in a student’s lawsuit challenging the school’s skirt’s only dress code for girls. An Appeals Court ruled in the student’s favor in 2022; Classical Charter Schools spent over $1.4 million in legal fees on the case.
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