This year’s Floridian of the Year has parlayed his experience as an education policy wonk into one of the fastest-growing for-profit charter school management companies in the nation, Charter Schools USA.
Lilly Rockwell | 12/26/2012
His company and the state are firmly astride a still-controversial national surge in charter school formation — in 2012, one in 17 Florida students attended a charter school.
Six miles northeast of the Capitol in Tallahassee is the Governor’s Charter Academy, a $11.4-million public school that opened in August with 515 students in grades K-6.
Jonathan Hage, 47
CEO, Charter Schools USA
EDUCATION: Bachelor’s degree, political science, University of Colorado, Colorado Springs. Master’s degree, liberal studies with a focus on economics and public policy, Georgetown University
FAMILY: Proposed to his wife atop the Washington monument. He had known her since the third grade. Sherry Hage now works at Charter Schools USA as chief academic officer.
The school was designed to be tour-friendly. Classrooms have glass walls, microphones and speakers so that someone standing outside the room can see and hear what’s going on inside: The principal can observe a teacher in action, for example. And a disruptive student removed from the class can still hear a lesson while sitting in the hallway. Sixth-graders learn on iPads, and teachers use Apple TVs and laptops.
“We designed things here that we thought would be innovative,” says Jonathan Hage, CEO of Fort Lauderdale-based Charter Schools USA, which built and manages the school.
Innovative — and also highly visible to nearby state legislators, whose support is vital both to the firm’s growth and to Florida’s role in the charter school movement. Nationally, the number of charter schools has grown from about 1,540 in 1999 to 5,613. In Florida, there are now more than 570 charter schools, and the number of students attending charters has increased by a factor of six in the past decade. In 2012, more than 200,000 Florida students — one in 17 — attended a charter school.
Charter Schools USA
HEADQUARTERS: Fort Lauderdale
EMPLOYEES: 4,502 Teachers: 3,130
SCHOOLS: 37 in Florida; 2 in Georgia; 2 in Louisiana; 3 in Indiana; 4 in Illinois
OWNERSHIP: Hage owns 95% of the company. Early investors — including Jonathan Mariner, former CFO for the Florida Marlins and now CFO for Major League Baseball, and Fort Lauderdale car dealer Phil Smith — own the other 5%.
NOTABLE: Charter Schools USA is the largest seller of charter school bond debt in the country. It will sell $100 million worth of bonds this year, Hage says. Most of Charter Schools USA’s school buildings are built with bonds. The bonds come with tax-exempt status because they are technically issued by the non-profit founding boards that oversee the schools.
Amid the trend, Hage’s 15-year-old company has staked out a leadership role. The Tallahassee school is the 37th it operates in Florida. It operates another 11 outside the state, including three chronically failing schools in Indianapolis that the state of Indiana took over from the local district and handed to Charter Schools USA this year to fix [“Turnaround”].
Hage’s firm, which has revenue of $285 million, will begin operating at least 15 more new charters this year, including schools in Michigan and North Carolina. The company’s office staff grew from 100 to 150 in 2012, and its total workforce, including teachers, rose from 2,000 to 4,502. “In one year we grew faster than the first 10 years of the company,” he says. “We opened 18 schools last year.”
Hage, the eldest of three brothers, grew up in middle-class Oakland Park near Fort Lauderdale. He’s a fourth-generation Floridian; his mother gave piano lessons, and his father was a music teacher at a public high school — “the quintessential teacher, the teacher-of-the-year kind of guy,” Hage says.
Academically indifferent in high school, Hage shuffled among several public and private schools, landing at Nova High School, which he describes as “a charter before there were charter schools.” He partied his way through a year at Trevecca Nazarene University in Nashville before returning home, switching to community college and enrolling in ROTC.
In 1986, Hage enlisted in the Army, eventually becoming a Green Beret. The training process, he says, imparted the discipline he feels he had lacked. After graduating with a degree in political science from the University of Colorado at Colorado Springs he got a job at the Heritage Foundation in Washington, D.C., and dabbled in political campaign work, doing research for President George H.W. Bush’s speechwriters.
Eventually, Hage landed a job as director of research at the Foundation for Florida’s Future, a public policy organization founded by Jeb Bush after Bush’s unsuccessful bid for governor in 1994. Bush says Hage “was a policy wonk” whose assignments included writing a comprehensive research paper on charter schools. “He was one of the most knowledgeable people on what was going on around the country,” Bush says.
Charter Operators in Florida: The Top 5
Company Headquarters Schools in Florida
Academica Miami 72
Charter Schools USA Ft. Lauderdale 37
Charter School Associates Sunrise 20
Imagine Schools Arlington, Va. 13
Accelerated Learning Solutions Miramar 10
Source: Florida Department of Education 2011-12 data, and self-reported data
» Florida has two of the top 10 districts with the highest growth of public charter school students:
NO. 2: Hillsborough County public schools, 6,120 students, a 52% increase from the prior year.
NO. 6: Broward County public schools, 23,294 students, up 26% from a year earlier.
» Florida has two of the top 10 districts with the most charter school students:
NO. 6: Miami-Dade County public schools, 35,083 students
NO. 10: Broward County public schools, 23,294 students
Source: The National Alliance for Public Charter Schools
After the state Legislature passed the law authorizing charter schools in 1996, Hage left the foundation and started his own consulting group, giving advice to charter school operators on how to get their applications approved by school districts. A year later, he started Charter Schools USA with less than $5,000.
Charter schools first appeared in the U.S. in the early 1990s, created as a way to give parents and students more choice. Typically, a group or organization petitions a local school district to start a charter school, which often has a particular specialty or theme—art, for example, or math. If approved, the responsibility for running the school passes to the group’s board of directors.
Founding organizations may consist of groups of parents, teachers, non-profit groups or universities. Some founding groups build and operate charter schools themselves — hiring teachers, developing curriculums and managing their own financial affairs. But most turn to operating firms like Charter Schools USA.
In exchange for freedom from many of the regulations that apply to traditional public schools, charters receive less funding and must meet performance standards to stay in business. In Florida, for example, charters receive between 68% and 71% of what traditional public schools get, according to a TaxWatch report.
Charters in Florida get a $6,383 per-pupil state allocation for each student they attract (minus an “administrative fee’’ assessed by the local district) but receive few funds from locally levied school-related taxes that can be used for school construction. Eligible charters split $55 million in state money to fund school construction. Charters can receive private donations but can’t charge tuition.
Operating companies like Charter Schools USA make money by creating efficiencies of scale in exchange for a fee — typically, Charter Schools USA’s fee is around 10% of the school’s budget. Overall, Hage says, the charter schools his firm operates in Florida get by on about two-thirds of the money spent on each pupil in a traditional public school.
Making those numbers work, he says, requires innovation and the ability to operate outside the regulatory box.
By not having to build to the state’s byzantine school building code and follow onerous bidding requirements, for example, Hage says he can build schools at half the cost of traditional public schools and can do it faster, typically taking about six months from groundbreaking to opening compared to over two years for traditional public schools.
Another cost-saving measure is combining elementary schools and middle schools on one campus, with shared facilities such as a gymnasium or cafeteria. Charter Schools USA also typically builds schools without kitchens, instead bringing food in and reheating it to cut down on preparation costs.
Starting salaries for teachers are 3% to 5% less than at traditional public schools, though Hage says teachers can make up to $5,000 in bonuses and earn an average salary of between $35,000 and $55,000.
One of Hage’s biggest efficiencies is in administration. Hage says the Miami-Dade County district spends $2,036 per child on administrative costs, while Charter Schools USA spends $1,425. Operations and maintenance costs are also about a third of what large urban districts typically spend, he says.
Charter schools don’t make money managing schools until after the first few years, when enrollment has risen and startup costs are past, Hage says. At the Cherokee Charter School in Georgia last year, for example, Charter Schools USA didn’t receive a fee and paid $900,000 to keep the school on its feet.
Studies of charter school students’ performance show mixed results. A 2011 state Department of Education report found students at charters performed comparably to those in traditional schools on most achievement measures, including “level 3 or above” on FCAT math and reading scores. Charter school students also showed lower “achievement gaps” among white, black and Hispanic students in most areas. A University of Central Florida professor disputes those findings based on calculations he did that controlled for income.
Collectively, the population of charter school students in Florida is 37% white, 23% African-American and 35% Hispanic, compared to 44% white, 23% African-American and 27% Hispanic in traditional schools.
Among the 23 schools operated by Charter Schools USA that received grades from the state last year, 16 were given “A,” six were “B” and one was a “C.”
Where does the CEO of Charter Schools USA send his own four children — ages 7-16? Hage winces at the question. They attend a $20,000-a-year private school, Pine Crest School, close to his office in north Broward County. “I know it sounds … like ‘Wow, he doesn’t believe in his own schools,’ ” he says. But Hage says the closest charter school to his home in Coral Ridge is 30 to 45 minutes away, and the commute is too difficult just to accommodate appearances. “If I had charter schools near me, they would go to my charter schools because we run great schools.”
Turnaround: Amid failure by the local district, the state of Indiana essentially confiscated three schools in Indianapolis considered the state’s worst and turned them over to Charter Schools USA. Emma Donnan Middle School, the lowest-performing middle school in the state, was the subject of a lengthy series in the Indianapolis Star newspaper last year that documented non-stop violence and chaos at Donnan. Already, the school has made dramatic improvements, says Indianapolis Star reporter Robert King. For the first several weeks, teachers focused almost exclusively on discipline, teaching students how to stand in line, ask questions and make polite requests. “We flooded the zone,” Hage says, hiring an entire new staff and principal, looking especially for highly motivated new teachers that come from programs like Teach For America.
Charters remain controversial, dogged by allegations of lax state oversight and insider deals. Opponents of charters point to high-visibility cases of mismanagement and failure. One headline: The principal of a charter high school in Orange County that failed was paid more than $500,000 as the school closed.
Charter Schools USA navigates closely near the legal line that requires the non-profit boards that start a school to be nonprofit. The law is meant to ensure that the boards remain focused on the school’s financial health and students’ progress — and can hold the companies hired to run the schools accountable.
The board responsible for Governor’s Charter Academy in Tallahassee, for example, is composed of five people who live in south Florida and operate under the name Renaissance Charter School Inc. They share the same mailing address as Charter Schools USA and have the same attorney listed on their business registration papers.
Ken Haiko, chair of the Governor’s Charter Academy board, also sits on the board of 29 other Charter Schools USA schools, according to the company’s website. He insists Renaissance Charter makes decisions independently. “We understand our roles,” Haiko says. “Our responsibility is to the school and to the students.” Still, Haiko says Renaissance Charter hasn’t worked with other charter school management companies, and it hasn’t ever received offers from other charter school operators.
This close association is “unfortunately too common,” says Gary Miron, a professor at Western Michigan University who studies charter school management companies. It violates the intent of the law, he says. “The board ends up being very dependent on the management company,” Miron says, making it difficult to hold them accountable.
Edward Pozzuoli, the attorney for Charter Schools USA, says there is “no direct or indirect connection at all” between the boards and the company. The relationship between Renaissance and Charter Schools USA has been “fully vetted” by tax lawyers, Pozzuoli says. The shared mailing address is a “small office for mail purposes.”
Hage says his company lobbies for measures requiring more accountability by charter schools. And he acknowledges his own firm’s failures. In its early years, the company shut down a school in north Miami after the building became too expensive to maintain at a level that would ensure student safety. His company also turned over another high school in Broward County to a different management company after failing to improve student achievement levels.
Sometimes, the company says, charter operators come under criticism simply because they make a profit from operating a public school. Hage counters that many companies, including textbook publishers, profit from doing business with school districts. “I don’t think profit is a four-letter word. It shouldn’t be scary,” he says. His own profit margins are in the “low-single digits,” he says.
Some of those profits go into lobbying to sustain the charter school momentum. This year, Hage donated more than $200,000 to legislative campaigns, looking for support for measures friendly to charters. Hage says he is giving more money to Democrats than ever before. “I see the landscape changing,” he says. Democrats “need to know if they give up the teacher’s union support, there will be someone else to support them.”
Hage says he “can’t stand” lobbying and political donations, but “there’s more at risk … and more folks fighting us than there used to be.” Combined, the teachers union and other traditional-school advocates spend more than charter school supporters, according to an analysis by the Miami Herald.
Hage’s chief goal in the Legislature is to expand charters’ ability to get funding for school construction — “at least, but not more than, 90% of the same funding as traditional public schools,” he says, rather than the roughly 30% difference in funding now. Extra funding would help pay for construction and more competitive wages, he says. Hage also says he supports tougher charter school regulations to prevent disasters like the Life Force Arts and Technology school in Pinellas County that shut down after declaring bankruptcy. The Tampa Bay Times reported that the school’s management company steered funds toward private business accounts. “I think charter schools have to step up,” says Hage, who “totally supports” letting traditional schools operate more like charters.
The future of charters? Hage’s company runs one online charter school, but he believes that “95% of the kids in this country will always go to bricks-and-mortar schools. My experience with … the 40,000 kids we educate is that kids do best when they are in social settings that help the whole child.”
Hage says charter schools remain the best way both to give parents a choice and to goose traditional public schools to improve by making them compete for students — and treat parents and students like customers. “I believe charter schools will help save traditional public schools,” he says.
The Charter Schools USA Template
Key features of how the company runs schools:
» Strong emphasis is placed on classroom discipline, especially in struggling schools. Elementary-age students are on a color-coded behavioral warning system.
» Parents are required to volunteer 20 hours a year at the school.
» Hage says a majority of his schools provide bus transportation, but at some schools, parents arrange for transportation.
» Students wear uniforms.
» To get their students enrolled, parents fill out an application and are entered into a lottery system in which children are selected at random.
» Electronic records track student progress daily and individualized goals are set for each student.
» At struggling schools, students stay in school longer each day and even go to school on Saturdays. These schools have mentorship programs and reading programs for parents to help improve their literacy. “We’re trying to give tools to them they didn’t have before,” Hage says. “We give books to parents.”
» Companywide, the teacher-to-student ratio is 1:16, smaller than most public schools.
» The company markets to parents with TV and radio advertisements and direct mailers.