It's now been two decades since Indiana's charter school law was passed. It's tough to say the state's first foray into school choice transformed public education for the better, but it certainly has bolstered some private business enterprises.
The Network For Public Education reported recently that National Heritage Academies, which operates the Andrew J. Brown Academy in Indianapolis, is selling 69 of its 90-plus schools to a new corporation created expressly for the acquisition. Charter Development Co., a real estate arm of National Heritage, will receive the payout from a sale that requires nearly $1 billion to finance.
The founder of National Heritage and owner of Charter Development Co., J.C. Huizenga of Grand Rapids, Michigan, has made close to $200,000 in campaign gifts to Indiana Republicans and a political action committee that pushed school choice legislation in Indiana.
Another Indiana charter operator has also seen a huge payout from selling his operations to a real estate arm. Former Fort Wayne Community Schools Superintendent Bill Coats, who left the district in 1994, founded the Leona Group in 1996, operating charter schools in Arizona, Michigan, Ohio and Indiana. The first charter school in Fort Wayne, the Timothy L. Johnson Academy, was opened by Leona in 2002. Leona operated it until 2018, when Phalen Leadership Academies took over.
Jim Hall of Arizonans for Charter School Accountability investigated Leona Group's finances in 2017, reporting Coats sold the company for $72 million.
“In 2007, Bill Coats, the sole owner of the Leona Group LLC, sold ten schools owned by Leona to a non-profit he created in 1998, the American Charter Schools Foundation (ACSF) for $33 million more than their market value,” he wrote. “ACSF 'leased' their facilities for $6,195,000 to the ten schools in 2016. When Bill Coats owned the schools in 2006, the total leases were less than half that amount – $2,875,034.
“The real estate windfall Bill Coats received in 2007 by selling his schools to his own foundation has caused ACSF to consistently cut classroom spending to the lowest rates of any school in Arizona – to fund the excessive mortgages,” Hall wrote.
The Journal Gazette reported on a similar real estate deal involving Fort Wayne's Imagine MASTer Academy at the former YWCA campus on North Wells Street. The campus was purchased in 2006 by North Wells Schoolhouse LLC, an Indiana company with the same Arlington, Virginia, mailing address as the for-profit Imagine Schools Inc., for $2.9 million. The local Imagine school board then subleased a portion of the campus from Schoolhouse Finance, Imagine Inc.'s real estate subsidiary. Schoolhouse, in turn, sold the property to JERIT CS Fund, a wholly owned subsidiary of Entertainment Properties Trust, a Kansas City-based real estate investment trust. ImagineMASTer Academy, threatened with closing by its authorizer, Ball State University, relinquished its charter and the school reopened as a voucher school, Horizon Christian Academy. About $3.6 million in loans made to Imagine was forgiven by the state of Indiana.
Headwaters Church now owns the Wells Street campus. It does not operate a charter or voucher school.
As a candidate for president, Joe Biden said he would end federal funding of for-profit charter schools. House Democrats are now pushing for legislation to make the schools ineligible for federal funds. Indiana taxpayers would be wise to ask their legislators to do the same with state funds.