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Monday, March 31, 2008

An IRS investigation of White Hat Management?

Posted By on Mon, Mar 31, 2008 at 5:09 AM

David Brennan has managed to fail on levels others can only dream of.
Over a decade ago, a man with a big white hat made a promise to Ohioans that he could educate at-risk children better than the public school system. It didn’t turn out so well. Hundreds of millions in taxpayer dollars later, David Brennan, the owner of White Hat Management, has actually managed to produce a school system that performs worse than Cleveland’s schools… “White Hat has 32 [Ohio] schools,” says Sue Taylor, president of the Ohio Federation of Teachers. “All of them as an aggregate are similar to a public school district, and if they were rated as such, they would be in academic emergency.” But Brennan’s schools aren’t rated like public schools. In fact, they appear to be entirely above the law. While White Hat is a for-profit company, the law dictates that its schools must be non-profit, independent entities. On paper, that’s just what they are. In fact, 25 of Brennan’s schools are exempt from paying taxes. But in the real scheme of things, White Hat schools are anything but independent or non-profit. Not only does White Hat own the names, buildings, teachers, and desks, but their contracts dictate that White Hat receive 95 to 97 percent of all the funding each school receives. “The schools organized by White Hat appear as if they comply with state law,” Taylor says. “But really, they are just pass throughs, channeling public money to the White Hat Corporation.” Taylor points to the people who sit on various White Hat school boards. In some instances, she says that some White Hat employees are sitting on several dozen boards. “A state audit of the fiscal year ending in 2006 showed that some were getting over $200,000 for just one meeting, because they were sitting over so many boards.” So the teachers’ union recently asked that the IRS to reconsider White Hat’s tax exempt status. “We are trying to point out to the IRS that this is not legal,” says union spokeswoman Lisa Zellner. From sketchy management contracts to double dipping board members, Taylor feels that they’ve built a solid case that Brennan’s charters are anything but non-profit. She’s just hoping that the IRS will agree. “Since we’ve submitted the report, its now just wait and see,” Taylor says. Unfortunately, it may be a long wait. Brennan is a monster contributor to the Republican Party, the main reason why the legislature has refused to cut off his funding despite dismal success rates. And since Brennan is also a major contributor to President Bush, don’t expect the IRS to rush to its own investigation. – Denise Grollmus

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