HISD looks to boost oversight of in-district charters
Houston ISD leaders have drafted new policies aimed at strengthening academic and financial oversight of in-district charter schools, changes welcomed by trustees who have complained about lax monitoring of the campuses in recent years.
The proposal marks a step toward added accountability of charter schools — albeit an imperfect one for some trustees — as HISD resets its relationship with eight organizations running 13 campuses under contract with the district. In recent years, some HISD trustees have complained that some in-district charter operators are not held to strong enough academic or spending standards, while also failing to support children who may need special education services.
In the recommended policy authored by HISD administrators at the request of trustees, in-district charters would receive clearer academic expectations, more requirements for financial disclosure and five-year contracts instead of annual agreements.
“It is long overdue,” HISD Board President Sue Deigaard said of the policy changes. “We have this same conversation every year, we have the same frustrations around these conversations, the same concerns. And I think this is a very strong step.”
Trustees are expected to vote on the policy in mid-June at the earliest, with the provisions taking effect in the 2022-23 school year. Board members are scheduled to vote Thursday on whether to extend agreements with each in-district charter for the 2020-21 school year.
The policy does not address one of the largest complaints about HISD’s oversight of charters: the ethics of networks doing business with their own board members and employees, deals known as “related party transactions.”
Over the past six years, three HISD in-district charters with overlapping board members and leadership — Energized For Excellence, Energized For STEM and
Inspired For Excellence — have paid about $14.5 million in rent and $10.1 million in management fees to a company owned by their head of schools, Lois Bullock. The three charters combine to run eight schools with about 4,000 students.
The transactions are legal and do not violate any HISD policies, but multiple trustees have criticized the agreements. HISD Trustee Elizabeth Santos has called the charters “obvious fronts for for-profit ventures.”
Trustee Anne Sung, who voted against renewing the Energized and Inspired contracts last year, did not call for a ban on related party transactions. However, she said district officials should ensure such deals are fair-market value and serve the best interests of children.
“I’m still a little worried that this policy is weak on the financial stuff,” Sung said. “I’m just concerned we don’t have enough rigor in the system to make sure charters are operating by the books.”
HISD administrators did not directly respond to a question from the Houston Chronicle about the appropriateness of the related party transactions involving Bullock’s company.
Lawyer Darrick Eugene, representing the Energized and Inspired networks, declined comment on the charters’ financial practices, saying the organizations “do not want to appear to attempt to influence the board as it makes its independent decisions.”
The charters previously produced a real estate market study and analysis of other charter management deals in response to public records requests, citing both as evidence of fairmarket arrangements.
Deigaard said she believes the proposed policy will undergo changes before a final vote, calling the proposal “85 percent there.”
Energized For Excellence and Energized For STEM likely will face a split board Thursday after trustees voted 5-4 last year to approve an annual extension. Inspired For Excellence plans to dissolve this summer, with the two affiliated charters absorbing its operation.
This year, the HISD board includes four newly elected trustees, three of whom replaced supporters of the Energized contracts.
The vote likely will hinge on trustees like Pat Allen, whose predecessor sided with keeping the Energized schools alive after hearing from parents who spoke highly of the campuses. Allen demurred this week when asked whether she plans to support renewal of the Energized schools, though she suggested some charters will not receive her vote.
“My main concern is education over money, and some of the things I know regarding the education of some students is not beneficial,” Allen said, declining to offer specifics.
The Energized organizations are receiving added scrutiny this year on multiple fronts: an additional $1.5 million in spending on rent with Bullock’s company in fiscal 2019 compared to the prior year; the forgiveness of a $4.1 million loan issued to Bullock’s company as back payment for management fees; and an auditor’s determination that Energized officials failed to properly document financial transfers between the two organizations.
However, Deigaard and Interim Superintendent Grenita Lathan have expressed concern that a sudden closure would leave families with few options for the 2020-21 school year, particularly given that many HISD campuses located near Energized campuses on the city’s southeast side already are at or near capacity.
Among the schools run by Bullock, one earned an A grade, five scored B’s, one received a D, and one failed under the state’s academic accountability rating system in 2019.