Clark Durant, a former member of Congress, started a network of private religious schools called Cornerstone in 1991. In 2009, he changed them to charter schools so they could get government funding. His chain of five schools needed more money because philanthropic donations had dried up.

What was not brought up at that moment: Durant’s relationship to property he was detailing, the one he was promising to get donations to modify.

Since 2012, when Madison-Carver first opened as a publicly-funded charter school, it has been paying 11% of its per pupil funding in rent. It’s landlord? The New Common School Foundation. A non-profit Durant created in 1996 to raise money for the Cornerstone schools. He currently serves as the president.

A 7 Action News review of a 2019 audit for the school found that Madison-Carver Academy spent over half a million dollars in rent to the New Common School foundation last year. These funds are in addition to the public dollars the school spends on maintenance, insurance and taxes, since the rental agreement is a triple-net lease, which places all up-keep expenses on the tenant. In 2019, according to the audit, these expenditures added up to over a quarter of a million dollars.

This set-up is found at all five Cornerstone charter schools. In the 2017-2018 school year, for example, the five charter schools spent over $2 million in public dollars on rent going to Durant-associated entities, a 7 Action News review of the schools’ check-registers found.

Durant declined an on-camera interview with Channel 7. Tina Kozak, a spokesperson for the schools and the New Common School Foundation sent a statement saying that “all rents are used for the purposes consistent with the Foundation’s mission.”

Adding that: “Besides its educational function, the Foundation also helps to raise funds and develop a real estate strategy to enhance the Cornerstone mission.”

The budget numbers and statement, however, highlight a somewhat confusing conundrum: While Durant is pounding the pavement asking for donations to improve the education outcomes of the students — fundraising for expenses like the construction of a private work-nook at Madison Carver Academy — he is simultaneously siphoning money away from the network of schools via rental agreements.

“It certainly raises ethical questions,” said Bruce Baker, a Rutgers University professor and expert on education financing, who points out that on top of the rental agreements, each Cornerstone school has a contract with its management company: Cornerstone Education Group. Durant currently serves as CEO.

While each contract is different, the management fees for Cornerstone Education Group range from 10% to 13.5% of each school’s per pupil funding. In other words, nearly a quarter of each school’s budget is going towards rent and management off the bat.

“A really big, disconcerting piece of this puzzle is that these are a number of entities drawing on the public dollars and then sending that money back and forth between themselves,” Baker continued, noting that all of these budget decisions, in turn, divert money from the classroom.

A 7 Action News analysis of state-funding data, found that while schools across the state spend, on average, 60% of their school funding on instruction, Cornerstone schools, on average, spend only 40% of their funding on instruction.

“Those relationships and the ability to see all the financial transactions between them or not, that’s a concern,” Baker continued, noting that while the current Cornerstone set-up may raise moral questions, it is also completely legal.

“All of this stuff sort of operates at the edge of legal concerns. It’s kind of within the boundaries of lacking sufficient legal regulation to call it out as absolutely against the law or in violation of some particular law or policy. There is just not enough regulation or policy to close those loopholes as of yet.”

Questions around Cornerstone were raised in December when Jared Davis, the principal of Cornerstone Health and Technology High School, was terminated.

Davis, who had been at the school for four and half years, filed a whistle-blower suit that month alleging that he was fired because of questions he raised around questionable contracts and ethics within the district.

At the center of the suit? The school’s management company: Cornerstone Education Group. Its landlord: New Common School Foundation. And the man behind both entities: Durant.

“It seems to be that the rich play by a different set of rules,” Davis’s attorney, Anthony Adams said, flicking at the incestuous nature of the various entities.

“If this situation occurred in Detroit Public Schools, where the head of Detroit Public Schools was leasing schools to DPS, and was also drawing a profit and a salary from those schools, that would be very problematic,” he continued. “We’d like to understand why that is, in the context of charters that we have different sets of rules it seems to be.”

No accountability. No transparency. Sweet deal.