Hage and other charter school supporters say the state’s funding formula for charter schools is inadequate, making it difficult for smaller schools to survive without assistance. Hage’s company benefits from scale, he said. “Being able to spread overhead costs over many schools and many students helps.”

Statewide, about one in four charter schools have shut down since 1996, either voluntarily or at the command of local school districts — double the national average. Most schools close for financial rather than academic reasons.

SCHOOLS AND THEIR LANDLORDS
For property owners, it’s a profitable deal

Charter schools generally receive more than 80 percent of their income in per-student payments from the state. In addition to the roughly $6,000 per-student allocation — slightly less than what traditional public schools receive — charter schools also get some state funds for facilities and maintenance.

For most charter schools, finding a location is the greatest difficulty and expense. Most schools rent their facilities — in churches, shopping centers, or brand-new school buildings erected by real-estate developers. Any property used by charter schools is exempt from property taxes.

Some schools devote less than 5 percent of their income to rent. Others pay crippling rates.

“Rent continues to be the greatest financial impact for our school,” administrators at Broward Community Charter West wrote in a report to the state Department of Education last year. The school was $118,000 in the red that year.

Neither the state nor the local school districts have rules or guidelines on how much a charter school lease should cost; nor are schools required to seek independent appraisals. But Hage, of Charter Schools USA, said a school’s lease should not eat up more than 20 percent of its revenue.

A Miami Herald review found 19 schools in Miami-Dade and Broward with rents exceeding 20 percent of their income in 2010 — about one in seven South Florida charter schools renting property that year. One Miami Gardens school spent 43 percent of its income on rent, according to audit reports.

Many of the highest rents are charged by landlords with ties to the management companies running the schools, The Miami Herald found. At least 56 charter schools in Miami-Dade and Broward counties sit on land whose owners are tied to management companies, property records show.

For example, the Lincoln-Martí Charter School in Hialeah paid $744,000 in rent last year — about 25 percent of the school’s $3 million budget, even after the landlord reduced the rent by $153,000. The previous year, the school spent one-third of its income on rent, audit records show.

Records show the landlord, D.P. Real Estate Holdings, and the management company are run by the same man: former Miami-Dade School Board member Demetrio Perez Jr. Perez’s son, Demetrio J. Perez, works at the management company, which operates three Lincoln-Martí charter schools.

The Lincoln-Martí charter schools were established by three friends of the elder Perez, who owns a string of well-known private schools and daycare centers also called Lincoln-Martí.

The younger Perez said the school buildings are too large for the student body: Only 364 students attend the school, though the facilities can hold up to 1,000 kids. He said the rent, at $9.78 per square foot, is below market rate; however, the board did not seek an appraisal before approving the lease.

Board member Gil Beltran said the elder Perez plays no role in the school. However, at Perez’s request, the board agreed last year to guarantee $24 million in loans for his real-estate business, records show.

After school district officials objected, the bank released the charter schools from the loan last month. “We didn’t see anything inappropriate about it,” Perez’s son said.

His father’s company has also agreed to give the school $350,000 before the end of the school year as a gift, the younger Perez said. The school currently owes $250,000 in overdue rent.

School districts don’t have the authority to dictate the terms of a charter school’s lease, or any other financial deals. That role falls to a school’s governing board.

But in many cases, the governing board includes members with ties to the management company or the landlord — creating a potential conflict.

At the Academy of Arts & Minds in Coconut Grove, the school’s founder, Manuel Alonso-Poch, acts as the school’s landlord, its manager and the food-service vendor. For the first three years the school operated, Alonso-Poch also served on the governing board, school records show. He stepped down at the urging of the school district in 2006.

Alonso-Poch still has close ties to the board: His cousin, Ruth “Chuny” Montaner, is the chairwoman of the board, which approved all of the school’s contracts with Alonso-Poch’s companies — including a lease that cost 28 percent of the school’s revenue in 2010. (Montaner did not vote on Alonso-Poch’s $90,000-a-year management contract.)

Another Arts & Minds board member, Jorge Guerra Castro, was listed as a board member for years, though he lives in Peru. Castro said he was unaware that he was named to the board until he was told about it by a Herald reporter — yet some school board meeting records purport to show his attendance.

In some instances, the landlords hold significant sway with charter schools’ governing boards.

The landlord of the Charter School at Waterstone in Homestead has the right “to be involved” in any decision to remove the school’s management company, under that school’s lease. Last year, landlord Luis Machado warned the school’s board not to renew a contract with a management firm that had sued the school over a contract dispute, records of the school’s Jan. 6, 2010, board meeting show. Machado told the board he wanted to make sure the school operated “within his business philosophy.”

The school’s board dropped the management company. Machado did not return phone calls seeking comment.

WHEN SCHOOLS PURSUE PROFITS
Strange things can happen, like $600 fees

As statewide budget cuts have hit the bottom line at all public schools, some charters have been accused of cutting costs and boosting revenue at the expense of children and parents.

It’s a story Tuli Chediak knows well. As her daughter was preparing to graduate from the International Studies Charter High School in Miami earlier this year, Chediak was notified that she had failed to complete the 120 hours of volunteer service required of all parents. Her family was told to pay $600 — $5 for each hour — or their daughter could not graduate, Chediak said.

The mother had signed paperwork promising to complete the volunteer service, a common requirement at private schools and some charters. But Chediak said the school offered few opportunities to complete the service. The contract said nothing about a fine or withholding her daughter from graduation, she said.

Chediak refused to pay and complained to the school district, which declined to get involved. The school ultimately allowed her daughter to graduate, and blamed the dispute on a miscommunication. But the experience left Chediak and other parents who were asked to pay frustrated.

“There are people taking advantage of parents,” she said. “It shouldn’t be that way.”

The Balere Language Academy saved cash by teaching nine seventh-graders in a wooden storage shed on campus, records show. One report by the school district said students “had difficulty putting their legs comfortably under the desks.”

The school denied it, but district photographs show colorful posters, a whiteboard and student papers hanging from the walls. The shed is no longer used for classes.

Arts & Minds boosted its bank account for several years by charging student fees for basic classes like math and reading — a violation of state law, school district officials said. The district complained about the practice in September, prompting Arts & Minds administrators to return all checks received from parents this school year.

Parents at Arts & Minds, a school that has relied on loans from its landlord and founder to stay in the black, had also complained that the school did not have enough books for its students, and some classes had no teachers for the first five weeks of this school year.

The complaints aren’t new: Earlier this year, school administrators were photocopying textbooks, until the school’s then-principal questioned whether this violated copyright laws, governing board minutes show.

Insiders at the Mavericks High of South Miami-Dade, a Homestead charter school for at-risk students, also say the school has broken state law to bring in more money.

Kelly Shaw, a former career coordinator at the school, filed a whistleblower suit in June accusing school administrators of defrauding the school district by inflating student attendance and enrollment figures, to increase the amount of money the school collected.

A former Mavericks teacher, Maria del Cristo, filed a separate suit accusing the school of improperly charging fees to students enrolling at the school. Through their attorney, Shaw and del Cristo declined to comment.

Lauren Hollander, the CEO of the school’s management company, Mavericks in Education Florida, denied the allegations, and said both women had been fired “for cause.” The lawsuits are still pending.

Miami-Dade school district officials said they never heard of the allegations.

KEEPING TABS ON PUBLIC DOLLARS
More monitoring urged, less monitoring OK’d

Many problems at charter schools go undetected until they become debilitating — if they’re discovered at all.

Charter schools are required to file financial statements with their local school districts. The reports are among the most important monitoring tools districts have to assess the financial health of charter schools.

Still, the statements don’t always show the complete picture. The law does not require operators to provide details on day-to-day spending — and governing boards can sometimes be left in the dark.

In 2007, the board of Sunshine Academy in Miramar went to police after discovering that the school’s principal, Alcira Manzano, had made unauthorized withdrawals from the school’s account — including $5,200 for a down payment on an SUV, court records show. The board closed the school, and Manzano was arrested on theft charges.

Investigators later found that Manzano had also made loans to the school and personally paid the rent. Broward County prosecutors dropped the charges against Manzano in June.

“The record keeping at the school and oversight of the school by the board of directors was virtually nonexistent,” prosecutor Kathryn Heaven wrote in a memo after dropping the case. “The school appears to have been poorly run.”

In 2008, a legislative report said the state should adopt stronger monitoring methods to detect struggling schools before they reach the brink of closing.

Instead, lawmakers relaxed the rules even more. Earlier this year, Gov. Rick Scott signed a bill allowing some high-performing schools to file financial reports quarterly, instead of monthly. The Legislature also reduced the amount of money that high-performing charter schools must pay to school districts to cover the costs of oversight.

Even when school districts detect problems, their ability to assess charter schools’ conduct and demand compliance is limited.

For example, state law does not spell out clear conflict-of-interest rules for charter schools or their governing boards — a shortcoming highlighted by legislative analysts in 2008, but never changed. Nor does the law clearly define how much control a management company should have.

Earlier this year, Miami-Dade school district auditors questioned whether four schools — two Life Skills charter schools and two Renaissance charter schools —were operating as mere pass-throughs to their for-profit management companies.

The Life Skills schools each paid 97 percent of their money to White Hat Management of Ohio, which in turn paid the school’s expenses — including lease payments to another White Hat company. White Hat officials did not return phone calls seeking comment.

The school district’s audit committee considered asking the schools to modify their contracts, but the district’s attorney determined that the district could not take action.

School districts can deny an application for a new charter school or refuse to renew a school’s charter. But the state Board of Education has overturned those decisions 30 times since 2003, state records show. (The state upheld 53 denials over the same time period.)

School districts can also close a school that has received consecutive failing grades or has persistent financial problems. But some districts, including Miami-Dade, have had that power questioned, too.

In 2010, the Miami-Dade School Board voted to close Rise Academy in Homestead after the school ended the year $250,000 in the red. Questionable expenses included $8,300 at retail clothing stores; $2,800 at hotels and Orlando theme parks; and $2,145 at restaurants, according to bank records. Meanwhile, teachers had gone unpaid and textbooks were in short supply.

Weeks later, the decision to close Rise was overturned by the state Board of Education. State education officials said the school, which had boosted its state-issued grade from F to A in a single year, had not received a fair hearing.

Rise never reopened.

Charter school advocates insist the law and state rules provide for enough oversight.

“There is absolute accountability,” said Lynn Norman-Teck, a spokeswoman for the Florida Consortium of Public Charter Schools. “Parents, if they see something wrong, will call the school, the district, Tallahassee.”

But district officials say it is a frustrating exercise.

“School districts are limited in their authority over charter schools,” said Schuster, the Miami-Dade spokesman. “They have minimal ability to impose effective consequences.”