A recent article in the Akron Beacon Journal raises the question of whether Ohio has the worst charter sector in the nation.


Reporter Doug Livingston delves into the charterindustry and what he finds is a nearly unbroken record of failure. Does anyone in the state government care?


He summarizes:


Ohio’s charter schools …


Drawing state dollars from local school districts, charter schools presented a cheaper, market-driven alternative to government-run schools.


■ Ohio law allowed for the first charter schools in 1998.


■ Nearly 40 percent of the 595 charter schools that ever opened in Ohio have closed. Financial difficulty is cited three times as often as academic failure. More than half the time, closure is voluntary, according to a state directory of shuttered charter schools.


■ Ohio’s charter schools rank among the lowest in the nation in advancing student learning.


He describes the intricate financing deals that enables charter operators to make a profit. Those who haven’t mastered the financing and political games are not likely to survive.


The financial transactions are complex:


“Through a public records request, the Beacon Journal reviewed hundreds of invoices, property lease and purchase agreements, vendor contracts, board minutes, court filings and other financial documents detailing how Cambridge spends much of the more than $30 million in state funding its managed schools will receive this academic year.


The paper also toured the company’s flagship school — Towpath Trail High School — and attended its latest board meeting to question the board and its legal counsel about their contract with Cambridge.


The company was born in 2012, founded by Marcus May, a former White Hat executive. Cambridge’s first three customers — dropout recovery high schools, like Towpath Trail, which is geared toward struggling 16- to 21-year-old students — had rebelled against White Hat after persistently low test scores and failing to get answers about how money was spent.


May saw unrest between White Hat and 10 schools over the next year as an opportunity. Without another company to help the breakaway schools acquire buildings and staff, “they would have drowned,” the schools’ attorney said.


May tapped friendships fostered through the years. School Warehouse, a Cincinnati business formed by Steve Kunkemoeller, a business associate of May’s, became the preferred vendor to furnish the schools. Most school boards sign no contract with School Warehouse, which holds a gentlemen’s agreement with Cambridge (enforced by May) to be the one-stop shop for all things furniture. The company serves as a middle man, marking up the price of desks and chairs in exchange for favorable financing terms that are hard to come by. Many banks, noting the high failure rate of charter schools, consider it too risky to lend them money. So Cambridge and Ohio charter schools find themselves turning to familiar faces or independent lenders that inflate interest rates to cover riskier loans.


Searching for vendors when the boards asked for bids, May took matters into his own hands. He founded Rearden Capital and d’Anconia Development to provide financing and line up private investors to purchase school property, often with an option for the schools to buy the property later.


“Rearden” and “d’Anconia” are the neoliberal protagonists in Atlas Shrugged, Ayn Rand’s ode to an unfettered free-market capitalism. Such is the philosophy May and others bring to public education.


For technology, a key component to deliver curriculum in dropout recovery schools, May turned to Suranjan Shome, who he met while launching a marketing firm named Mindgrab in the Akron Business Incubator. Shome built Epiphany Management Group (EMG) then bought May’s marketing firm. EMG now outfits Cambridge managed schools with technology.


Despite having an office in Fairlawn, the hub of activity for Cambridge is Towpath Trail at 275 W. Market St. May helped board members acquire and turn the old office building into a modern school. At the time of the property transfer, Donald Cureton, a board member at other Cambridge managed schools, was a part owner of the property through Bee Investments, according to records at the Summit County Fiscal Office.


A similar inside deal, involving unknown investors wrangled by May, was behind the purchase and opening of Wright Preparatory School in Canton this school year. The new Canton school board, which borrows members from sister schools, had no capital to buy the property. It turned to Cambridge, which called May for help.


These close-knit arrangements involving transactions that often lead back to May smack of self-dealing, so much so that a grand jury in Florida indicted School Warehouse and Newpoint Education Partners, May’s version of Cambridge in Florida, on charges of grand theft, money laundering and aggravated white-collar crime. A court filing details $40,000 in timed withdrawals and deposits that bounce between unknown bank accounts. The source and destination of the transactions remain a mystery as stakeholders in Ohio, including the schools’ boards, keep a close eye on the Florida case.”