News: Un-Chartered Territory

When public school is a private business, conflict follows

Jymi Bolden

SABIS International School of Cincinnati is thesubject of a battle for control.

An educational turf battle pitting a citizens' board against a private education-services company is threatening the future of a charter school in Mount Auburn.

The two-year-old SABIS International School of Cincinnati has 672 students in kindergarten through eighth grade. Students attend for free.

SABIS Educational Systems, Inc. a private, for-profit company, runs the school's day-to-day operations. SABIS — the name is an acronym based on the names of the company's founders — operates or is affiliated with 28 schools in 11 countries. Its curriculum emphasizes repetition and testing, with students wearing uniforms.

Although the school is publicly funded, SABIS Inc. hires all staff and owns the school buildings and land. A four-member citizens' board of trustees is also in place.

The fight at SABIS International School of Cincinnati is over how much say parents and other citizens have over charter schools, especially those run by private companies.

Controlling the board
In December, the citizens' board terminated its five-year contract with SABIS Inc. Among the board's complaints were a lack of timely and detailed financial information from school administrators.

On March 25, the board filed a lawsuit seeking to have the school dissolved and its assets turned over to the Ohio Auditor of State. The lawsuit says the SABIS contract made it impossible for the school board to fulfill its function as the organization that oversees the school.

The board voted to revoke SABIS Inc.'s contract after months of deteriorating relations. While SABIS believes the board should serve the same role as a corporate board — making policy decisions at an arm's length — the board members want a more hands-on approach, with access to detailed information and a bigger say on day-to-day operations.

Consultant Charles Wallner, the board's agent, paints a picture of questionable practices at the school, including a contract that makes the school unusually beholden to SABIS Inc. Wallner says the contract was negotiated by the school's developer, Carol Kerlakian, a cousin of SABIS Inc. founder Ralph Bistany and a 1975 graduate of the SABIS high school in Beirut.

Cincinnati Education Management, LLC — an arm of SABIS — owns the land and buildings the school leases. The company collects $98,625 in monthly rent, Wallner says.

The school annually receives more than $5,000 per pupil in state and federal education funds, according to Jose Afonso, SABIS Inc.'s director for board and governmental affairs.

"No one knows where all that money is going," Wallner says.

Two years ago Cincinnati Education Management bought a block of land and buildings for the school for $1 million (see "The Will to Survive," March 9-15, 2000). SABIS Inc. doesn't usually own property, but bought it because the school needed a site, according to Afonso.

The company and the board used to get along, but their relationship deteriorated because board members bypassed the school director and asked for records from the school's financial officer, among other reasons, Afonso says. The board also refused to mediate disputes with SABIS Inc. before terminating the company's contract, he says.

"We feel that this is a group we can't work with," Afonso says. "This is purely a personal dispute between (board president) Tracey Lowe and SABIS."

Lowe referred questions to Wallner, who says SABIS Inc. doesn't want an independent board to oversee the school. Wallner says the company hasn't provided the board with basic information, including how much it costs to run the school. Board members have also been unwelcome on school grounds.

"SABIS wanted to control the board," Wallner says.

The dispute isn't over curriculum, which is a slight improvement over a public school curriculum, Wallner says.

In January, Steve Burigana, executive director of Ohio Department of Education's (ODE) Office of Community Schools, met with both sides of the dispute and more than 80 parents. Burigana believes the dispute is mainly about management styles. He saw no evidence of financial mismanagement, judging by the quality of the school's facilities, although Burigana says he hasn't seen all the details yet.

"The level of detail of the (financial) reports is something less than I would like to see," he says.

The state auditor is conducting its first audit of the school, which is expected to be finished in April.

The board believes it is serving too distant a role in the school's management, according to Burigana.

"They don't feel they have enough information," he says.

What does he think?

"I'm not going to take one side or another on this," Burigana says.

Closing loopholes
One thing is almost certain: SABIS Cincinnati will not indefinitely exist in its current form. Last week the Ohio House of Representatives passed House Bill 364, a major reform of the 1997 charter school laws.

Across the state, 92 charter schools have opened, 75 of which are under the supervision of ODE. The new law would end ODE's supervision of charter schools.

The House acted after the state auditor's office said in February report the ODE-sponsored charter schools need better oversight on many fronts.

Ohio's drive in the late 1990s to introduce competition to public schools might have freed some classrooms from the burdens of regulation. But it also opened significant ethical loopholes.

The laws allow charter school board members to have a financial interest in contracts they approve, contrary to the rules almost every tax-spending body must follow.

The old laws also vaguely defined how the state should monitor charter schools. ODE believed legislators wanted a "hands-off" policy on regulation, according to Melanie Bates, a member of the Cincinnati Board of Education and former member of the Ohio Board of Education.

"So that's exactly what we did," Bates says.

Under House Bill 364, existing and new charter schools would need to be sponsored by local school districts, vocational schools or by non-profit corporations.

Some SABIS School parents have approached Cincinnati Public Schools (CPS) for information about the district sponsoring a SABIS school, according to John Rothwell, CPS' charter school manager. Afonso says SABIS plans to ask CPS as well.

"We're doing everything we can to keep the school in operation," Afonso says.

SABIS Inc.'s corporate management style might cause a clash with CPS. Charter schools must have nonprofit boards, recognized by the state, according to Ohio law. CPS, however, might want charter schools to have federal non-profit status, Rothwell says.

"I think we as a district would want that," he says. "This would require detailed financial reporting."

The SABIS Cincinnati board applied for federal non-profit status, but IRS responded by asking 17 questions about the application, mostly about the level of SABIS Inc.'s involvement in decision-making.

Bates and Burigana say the state didn't anticipate a company such as SABIS having so much control over charter schools. But the school meets the state's intentions, Afonso says.

"Absolutely — the state approved our application," he says.

Right now the company is losing money on the school, Afonso says.

"We have nothing to hide," he says. "SABIS is a pretty straightforward company." ©

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