That’s Right Nate

Thoughts from a right thinker.

Imagine Schools Cash in On Education

with 13 comments

Dennis Bakke is on top of the education world.   As the CEO of Imagine Schools, he oversees the fastest growing brand name in the education business with over 36,000 students at 74 schools in 12 states and the District of Columbia.   He is rightfully heralded as one of the leaders of the education reform movement.   The Washington Post lauded Mr. Bakke and his wife Eileen for winning a lawsuit to force Maryland to increase their funding for charter schools by over 60%.   Jason Botel, who directs KIPP charter schools in Baltimore, is one educator who knows what the Bakkes have accomplished. “Their funding of advocacy efforts has helped make sure that . . . charter schools like ours can provide a great education for children in Maryland,” he said.

Bakke has done quite well for himself and for other charter operators.  In fact, last year he donated $20,000 to Republican politicians in his own name.   He’s a member of The Family, a Christian organization that was recently in the news following several sex scandals.  What does Bakke owe his success too?  He sums up his philosophy in two words, “have fun”, which is a philosophy that has served Bakke well over the years.   In fact,  he wrote a book on it called “Joy at Work” which was a very successful publication.   The Bakkes say parents are attracted to their schools in part because of the emphasis on character. “We talk to the kids from Day One,” Eileen Bakke said. “What does it mean to be responsible? What does it mean to have integrity?”

One trick that Imagine Education has used was just revealed in the Saint Louis Post Dispatch in the form of a leaked email from Bakke to his top executives at Imagine Schools.  The email explains several tricks for picking the executive boards of Imagine Charter Schools carefully to avoid board members who feel, “ownership of the school. Many honestly believe it is their school and that the school will not go well without them steering the school toward “excellence”. They believe they are the “governing” Board even if that adjective to describe the board has never been used by an Imagine School person.”

The board members probably get this idea from local laws that usually require local residents govern the charter school.  There is an excellent article in the November 1st Fort Wayne Journal Gazette that shows how the entire charter process was manipulated by Bakke and Imagination Schools in opening up 4 chart schools in Fort Wayne Indiana.  The paper concluded that the advisory board makes no decisions and gives no advice, “Not the $87,510 a year to operate school buses. Not $114,871 to run a lunch program. Not which teachers are hired or whether to hold summer school, or even whether to borrow more than $1 million for operations.”

So how much money is Imagination Schools making on the for profit education game?  In Indiana the local contract required the schools there to give the parent company 12 cents on every tax  dollar they took in.   This seems to be a fairly standard contract for the company.   If they have 36,000 students and states are giving them on average about $6,000 per student simple math comes out to about $26 million tax free.   That’s good, but let’s face it you can barely pay the salary of one power hitting third baseman for that.    Fortunately, you can’t beat real estate for generating profits.

The Dallas News explained how Imagine’s real estate works.   The real estate arm of Imagine Schools is called Schoolhouse Finance:

In Nevada, the state awarded 100 Academy of Excellence in North Las Vegas a charter, and the school hired Imagine to run its educational services. Schoolhouse Finance, the Imagine subsidiary, paid for the school’s property and building construction. Schoolhouse Finance then leased the property to the charter school for $1.4 million a year.

Next, Schoolhouse Finance sold the $8 million property to a real estate investment trust, Kansas City, Mo.,-based Entertainment Properties Trust. The trust then leased the property back to Schoolhouse Finance at a lower rate than the charter school pays.

Money remaining after Schoolhouse Finance pays its lease to the trust goes to Imagine Schools Inc. This tiered lease system has led to 10 percent returns on investment for owners and investors in the two companies.

A principal in Indiana and another one in Las Vegas were fired after complaining to Imagine about rent that cost them approximately 40% of their operating budget.   Most charters pay 10-15% of their operating budget for rent if they don’t own the property outright.  This leaves the schools with very little money for things like books and teachers.    From May of 2008 until November of this year, Imagine went from 51 to 74 schools.   Yet, this year the teachers at the Imagine Charter School in Weston, FA were hit with pay cuts of up to 22 percent.

OK, I had to do another serious education story and yeah, it’s kind of dry with all the money talk.   Sometimes, outrage does overtake my desire for satire.   The point here is that in the world of for profit education, expanding is everything.   Whether you’re talking about KIPP, UNO, or any of the other charter school groups with multiple schools you have to follow the money.   Tax dollars that should be going to the children of this country, in too many cases are going to companies like this.   Is this really reform?  Is opening up more schools like this really a race to the top?




Written by thatsrightnate

November 9, 2009 at 10:40 pm

13 Responses

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  1. Great reading and great information, Nate. Thank you for posting it.


    November 13, 2009 at 8:13 pm

  2. Hey Shannon, good to see you! I’m glad you liked it.


    November 13, 2009 at 9:06 pm

  3. What a shame that people with money and power are more often than not too narcissistic to be true philanthropists. Their position is such that if they so chose, they could greatly benefit education in American. Unfortunately, the man doesn’t have a sincere bone in his body. I sat through an I-love-me speach that he gave at one of his schools. He spoke mostly of his “Joy at Work” book (mandated reading for employees), but the only thing I can clearly remember is his final statement – “so….would anyone like me to sign their book?” (What a goob!)
    Their schools are a sham! Fortunately the media and others who monitor education in America are beginning to call them to the carpet!


    November 17, 2009 at 5:24 pm

  4. Yes, I’m seeing that in Indiana. Unfortunately, there are a lot of equally corrupt charter operators. I hope to profile some of them soon.


    November 17, 2009 at 6:11 pm

  5. A small school in Kennesaw has successfully dumped Imagine Schools, but they aren’t going quietly. It’s about to get ugly.


    January 16, 2010 at 9:45 am

  6. Thanks for posting. I had read about them being dumped. I know it isn’t easy though. Some of these charter school companies are the cockroaches of education.


    January 16, 2010 at 10:14 am

  7. Hi-
    Have you heard anything about Imagine Schools newest school in Las Vegas, Imagine School in the Valle? They are still renting the YMCA campus and 2 local churches for their Kinder classes. Last time I spoke to them they are still considering renting an existing site or building ground up beginning next school year. Renting out the YMCA is more cost effective and I’m sure they have been going the safe route with all the controversy with 100 Academy of Excellence. It is interesting how much drama that school (Academy of Excellence) has gone through serving a larger population of socio-economic disadvantaged children, while Imagine School in the Valle is more culturally diverse and surrounded by middle class neighborhoods. No surprise though. Had they mirrored Andre Agassi’s Academy, a high achieving Charter School, located just up the street from Academy of Excellence, they might have been okay. They serve the same population and are a true example that if given guidance, proper education and funding is used for the students, no matter what your family income is, you can excel academically!


    February 4, 2010 at 4:08 pm

  8. We are an Imagine family in Georgia and the way they set up the schools here and everywhere it seems have got to be illegal. They are profitting from tax dollars, millions of dollars. Not just off their management fees but rent our school pays for the property they own. Their management of our school has never been in the best interest of the students. I think the IRS needs to audit them here in the state of Georgia and investigate them for fraud or educational neglect. Any thoughts on how to terminate a management contract with a school that owns every iota of it without jeopardizing the school itself?


    February 13, 2010 at 10:01 pm

  9. That’s a hard thing to do. The best advice I can give you is to look at what parents in other schools have done. According to another poster, a school in Kennesaw dumped them so it’s possible.


    February 14, 2010 at 12:54 am

  10. My kids attend the Kennesaw school that is no longer “a proud member of the Imagine Schools Family” (or as we put it, either “a reluctant member…” or “a hostage of the Imagine Schools family.”). I’m thrilled that we are now a truly independent charter school. We’ve very fortunate that we had the opportunity to successfully boot them. Our situation was unique since we were a Chancelor Beacon school that Imagine took over. Despite Imagine’s best efforts, we didn’t have their new (illegal) LLC board structure that allows them to act as the man behind the curtain controlling everything. The first big step in this process, as I understand it, was for our school district to set us up to enable us to make the change. They gave us a one year charter contingent upon a revision of our operating agreement with Imagine such that the length of the contract matched the length of the charter and that the contract had to have a definite end date where both parties could walk away if need be. That date was to be at the end of the first week in August, 2010. Fortunately, we were able to separate before then and save nearly $30,000 per month in management fees to Imagine!

    Best advice to other schools….DOCUMENT.DOCUMENT,DOCUMENT!!!! Imagine doesn’t like to put things in writing so you have to. When the Regional Director calls rather than sends an email, follow that phone call up with an email saying “to summarize our conversation…” This sort of documentation will hold up in court! Second, work with your school district. Have them help you in any way they can. Will they force Imagine to do what they did in Kennesaw? Renegotiate the contract s that the school can easily break away

    ter Mom

    April 1, 2010 at 12:35 am

  11. Thanks for posting that ter Mom. I hope it helps.


    April 1, 2010 at 10:27 am

  12. This article brings everything to light and then some. As an employee here at Enviornmental Science and Math in Saint Louis. I have seen some real horror stories. For one the model to generate quick dollars is to advertise that you can accomodate Intellectually deficient student, when in reality you cannot. This generates more money for your school because the state gives more money for these students. Subsequently that money is used in many other ways. Secondly, it seems that the school’s strategy is really never to meet AYP (average yearly progrress)but to fill the real estate cauffers of the company and then move on. One strategy I think that this company is using that goes under the radar of even seasoned media professionals is the selection of areas for school development. Right down to how the land is chosen from shady developers, to choosing populations who will never ask real questions about theeir childs education. It seems to be one of the worst formulas for poverty pimping in Missouri.


    September 9, 2010 at 10:08 am

  13. Thanks for the reply. If you’ll pardon the pun, it was very educational.


    September 9, 2010 at 8:43 pm

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